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Austrian mayor to resign after handed jail term linked to finance scandal

VIENNA (Reuters) - The mayor of the Austrian city of Salzburg will resign after he was handed a three-year jail sentence for his part in a wider scandal in which local officials lost 340 million euros ($400 million) of public money in risky stock and debt trades.

In 2012 it emerged that an official in the Salzburg province administration had run up the losses over years of such deals. In a trial which ended last year, she was found guilty of serious fraud and forgery of documents and given a three-year suspended jail sentence.

She was also a defendant in the separate trial pertaining to actions of Salzburg mayor Heinz Schaden, which ended on Friday.

Schaden was found guilty of allowing transactions related to interest rate swap trades to be made free of charge from the city of Salzburg to Salzburg province in 2007.

These transfers are estimated to have cost taxpayers around 5 million euros, local media quoted the prosecutor as saying.

The other five defendants, which included his former secretary, were also found guilty of involvement and received jail terms of between one and three years in prison, some suspended and subject to appeal.

Schaden, a Social Democrat, has maintained his innocence throughout the trial, said on Monday he would not step down until September.

His lawyer will appeal the sentence, according to broadcaster ORF. Schaden will not be jailed unless he loses.

The Salzburg scandal is not the biggest to have hit taxpayers' pockets in recent years. At around the same time the downfall of Hypo Alpe Adria Bank in the southern province of Carinthia cost the state more than 5 billion euros.

($1 = 0.8524 euros)

(Reporting By Shadia Nasralla; Editing by Raissa Kasolowsky)