"The Handelsblatt story is completely false," Jeff Taufield, a New York-based spokesman for the Swiss Bankers Association, said of a story released on Thursday by the German business newspaper.

"It is a fabricated story that represents a cruel hoax to Holocaust survivors," Taufield said.

Handelsblatt quoted Swiss banking sources as saying they were now prepared to raise their $600 million offer, which has been rejected by Jewish groups and lawyers for plaintiffs in a class-action lawsuit.

"The banks' proposal to establish the $600 million fund to resolve all `rough Justice' issues remains on the table, plus we are committed to pay whatever Volker recommends as a result of his audit, plus the interest which will be determined by the noted economist, Henry Kaufman," Taufield added.

He wasreferring to Paul Volker, the former chairman of the US Federal Reserve, who heads an independent commission conducting an audit of Swiss bank records to find unclaimed Swiss bank accounts.

Talks between the Swiss banks, Jewish groups and lawyers representing 31,000 survivors of Nazi concentration camps or their heirs broke down in June when the banks went public with their offer.

Jewish groups have called for a $1.5 billion settlement that would cover all claims against big Swiss banks, the Swiss government and the central bank. However, neither the Swiss government nor the central bank have agreed to enter the talks.

Sources close to the talks said on Thursday that a majors tumbling block to a settlement with the banks has been removed with Swiss bankers agreeing to reach a settlement independent of the government or the country's central bank.

Meanwhile, the US Senate will hold hearings to discuss whether to reopen a 1946 treaty under which the Swiss returned about a fifth of the Nazi gold itbought during the war.

The head of the Swiss government's Holocaust Task Force, ambassador Thomas Borer, informed the Senate committee's republican chairman, Alfonse D'Amato, a major critic, that his government will not take part in the hearings.

Taufield would not comment on whether representatives from the Swiss banks would take part in the hearings, but said he expected an answer would be given within days.