NEW YORK (Reuters) - Major creditors suing Argentina in U.S. courts over defaulted bonds have agreed to broad terms of an agreement to resolve the long-running litigation but need more time to complete the $5 billion deal, a lawyer for the investors said Wednesday.

Ending the litigation would be an historic step for Argentina, which has battled creditors who refused to accept the terms of earlier debt restructurings in 2005 and 2010.

The disclosure about the agreement, later criticized as a violation of confidentiality by a court-appointed mediator, came during a hearing before a federal appeals court in New York.

The appeals panel said it will allow a judge to go ahead with lifting injunctions that have restricted it from making some of its debt payments.

Matthew McGill, a lawyer representing creditors Elliott Management’s NML Capital and Aurelius Capital Management in court, said there had been “an agreement on economic terms with Argentina since Thursday.” He also called the deal a “$5 billion transaction.”

But McGill said his clients needed more time beyond a February 29 deadline for bondholders to agree to participate in the country’s offer to pay $6.5 billion to resolve various lawsuits.

“If we have just a little time we can finish the deal,” McGill said.

Court appointed mediator Daniel Pollack said McGill had spoken out of place.

“That statement violated the confidentiality of the discussions between the parties, which is an inviolable principle of all negotiations,” Pollack said in a statement.

“If and when there is a signed agreement in principle reached between those or any other parties, I will announce it,” he said.

Mark Brodsky, the Aurelius chairman, declined to comment through a spokesman. Calls to Elliott Management were not immediately returned.

A spokeswoman for the Argentine economy ministry had no immediate comment.

The Argentine stock market and locally traded over- the-counter bonds cut some early-day losses but were largely unchanged after terms of an agreement were disclosed.

Investors had already factored in an eventual deal between the government and its holdout creditors.

Along with a slew of reforms enacted by President Mauricio Macri since his December inauguration, a comprehensive pact with holdout creditors could allow Argentina to issue debt in the global sovereign bond market and stop relying on inflationary central bank financing of its budget, Wall Street analysts have said.

It would also likely cheapen access to external funding for companies and provincial governments in need of better roads and other infrastructure used by farmers to transport soy, corn and wheat in the grains exporting powerhouse.

Elected in November on an open-markets platform, Macri has lifted trade and currency controls, triggering a steep fall in the local peso. He has also slashed taxes on farmers and ditched export curbs in a bid to increase production.

TIME NEEDED

McGill urged the 2nd U.S. Circuit Court of Appeals to not dismiss various appeals by Argentina that, while pending, prevented U.S. District Judge Thomas Griesa from lifting the injunctions.

Griesa signaled on Friday he would lift the injunctions but said he lacked jurisdiction to do so while the appeals were pending.

While the panel said it would dismiss the appeals as Argentina requested, the judges said they would direct that any order by Griesa putting Friday’s decision into effect be put on hold for two weeks to allow bondholders to file an appeal.

Michael Paskin, a lawyer for Argentina, said the country itself would like any appeal of Griesa’s order to occur as “quickly as possible” to provide certainty amid its settlement efforts.

“Without that, it makes the entire situation untenable,” he told the court.

The proposed total $6.5 billion settlement offer announced by Argentina on Feb. 5 represents a 27.5 percent to 30 percent discount for creditors who filed claims of about $9 billion.

The settlements are conditioned on the approval of the Argentine Congress and the lifting of injunctions in the litigation. Macri’s forces in Congress say they will have the votes to approve the deals.