ATHENS/BERLIN (Reuters) – German Chancellor Angela Merkel and the head of the IMF warned of financial contagion on Wednesday unless a euro zone debt crisis is stopped in Greece, while investors fled to the safe havens of the dollar and gold.

Greek public and private sector workers shut down airports, tourist sites and public services in a general strike against harsher austerity, accepted by the government as the price for a 110 billion euro ($146.5 billion) EU/IMF bailout on Sunday.

Merkel told parliament Europe’s fate was at stake in the most serious crisis in the single currency’s 11-year lifetime, and other euro zone countries could suffer the same fate as Greece unless the international rescue succeeds.

Anxiety over a widening of the euro zone debt crisis sent stocks tumbling worldwide, and the euro to a new one-year low.

Shares in Spain and Portugal, seen as the next two targets for investors testing the European Union’s will and ability to defend weak euro zone economies, fell for a second straight day.

Merkel, whose foot-dragging on aid for Greece many analysts blame for aggravating the crisis, told parliament the success of the rescue package would determine “nothing less than the future of Europe — and with it the future of Germany in Europe.”

“We’re at a fork in the road,” she said in a debate on approving Berlin’s 22 billion euro contribution to the emergency loans for Athens despite hostility among the German public.

BERLIN, May 5 (Reuters) – An international rescue plan for debt-stricken Greece must succeed or other European countries may suffer the same fate, threatening the bloc’s future, German Chancellor Angela Merkel said on Wednesday.

In an impassioned speech to the Bundestag lower house of parliament, Merkel said Germany was now convinced of the need to bail out Greece and confident the Greek government would carry out the swingeing cuts it had pledged to tackle its deficit.

“We’re at a fork in the road,” Merkel told the assembled lawmakers. “This is about nothing less than the future of Europe – and with it the future of Germany in Europe.”

“There is no alternative to the aid to be agreed for Greece if we want to secure the financial stability of the euro area.”

“It must come to avoid a chain reaction in the European and international financial system and the risk of contagion of other euro member states,” she added.

At the weekend, officials from the European Union and International Monetary Fund (IMF) revealed details of a 110-billion euro ($147 billion), three year aid package conditional on strict austerity measures that have led to mass protests in Greece.

“Europe today is looking to Germany. Without us, or against us, there cannot or will not be a decision that is economically sustainable,” she said to a Bundestag session in which she was regularly interrupted by shouts from opposition lawmakers.

BERLIN (Reuters) – German Chancellor Angela Merkel said on Wednesday Greece’s international bailout must be accelerated for the sake of the entire euro zone, as the far bigger Spanish economy suffered a credit rating downgrade.

U.S. President Barack Obama joined expressions of concern about how a debt crisis which began in Greece might affect economies across Europe and beyond, tempering optimism from reports that the rescue would be much bigger than expected.

The euro fell to a year low and European stocks slid after Standard & Poor’s cut Spain’s credit rating.

Merkel, who has long held doubts about bailing out Athens due to strong opposition among German voters, expressed impatience about the pace of talks on the rescue.

“It’s quite clear that the negotiations between the Greek government, the European Commission and the International Monetary Fund must be accelerated,” she said in Berlin at a joint news conference with IMF chief Dominique Strauss-Kahn.

In European terms, Greece’s economy is small and its financial problems are relatively modest. But politicians fear the crisis could spread to other economies, some of which are far larger and would be much more costly to help.

Shortly after Merkel spoke, S&P downgraded Spain’s ratings one notch to AA from AA+, with a negative outlook, saying it expected the euro zone’s fourth biggest economy to grow only slowly in the next few years.

BERLIN (Reuters) – German Chancellor Angela Merkel said on Wednesday that Greece’s international bailout must be accelerated for the sake of the entire euro zone, as the far bigger Spanish economy suffered a credit rating downgrade.

U.S. President Barack Obama joined expressions of concern about how a debt crisis which began in Greece might affect economies across Europe and beyond, tempering optimism from reports that the rescue would be much bigger than expected.

The euro fell to a year low and European stocks slid after Standard & Poor’s cut Spain’s credit rating.

Merkel, who has long held doubts about bailing out Athens due to strong opposition among German voters, expressed impatience about the pace of talks on the rescue.

“It’s quite clear that the negotiations between the Greek government, the European Commission and the International Monetary Fund must be accelerated,” she said in Berlin at a joint news conference with IMF chief Dominique Strauss-Kahn.

In European terms, Greece’s economy is small and its financial problems are relatively modest. But politicians fear the crisis could spread to other economies, some of which are far larger and would be much more costly to help.

Shortly after Merkel spoke, S&P downgraded Spain’s ratings one notch to AA from AA+, with a negative outlook, saying it expected the euro zone’s fourth biggest economy to grow only slowly in the next few years.

BERLIN (Reuters) – The international bailout of Greece is likely to total up to 120 billion euros, a German lawmaker said on Wednesday after International Monetary Fund chief Dominique Strauss-Kahn held talks in Berlin.

Germany has been reluctant to help debt-riddled Greece and Strauss-Kahn said it was too soon to give details as the rescue package was not yet finalized.

But markets rebounded on Wednesday on expectations that the aid will be much bigger than originally envisaged.

The euro lifted off a one-year low against the dollar which it hit earlier on Wednesday, and was up 0.4 percent on the day at $1.3212. The Greek/German 10-year government bond yield spread was at 792 basis points, off an earlier record above 1,000 basis points.

“If all this goes together rapidly, I’m really confident that the problem will be fixed. But if we don’t fix it in Greece it may have a lot of consequences on the rest of the European Union,” Strauss-Kahn said after he and European Central Bank president Jean-Claude Trichet met the parliamentarians.

Financial markets have fallen precipitously this week on fears of a Greek default and a possible domino-effect through fringe EU states, and some investors have questioned whether the euro currency zone can survive the billowing crisis.

One German lawmaker quoted Strauss-Kahn as saying the eventual package for Greece would be worth 100-120 billion euros ($133-160 billion) over three years, against just 45 billion pledged for this year by the IMF and euro zone governments.

ATHENS/BERLIN (Reuters) – Rating agency Standard and Poor’s slashed Greek debt to junk status on Tuesday and also downgraded Portugal, as investors worried political pressures could block a multi-billion euro bailout of Greece.

Markets in Europe and the United States tumbled in reaction to signs that the Greek debt crisis was spreading to other highly indebted states on the periphery of the euro zone.

U.S. crude oil futures sank more than 2 percent and the euro

fell back near a one-year low against the U.S. dollar.

“It’s contagion from the Greece crisis which has spiralled out of control. That creates an element of doubt about other countries that have a substantial amount of debt relative to GDP,” said William Sullivan at JVB Financial Group in Florida.

“It’s like coconuts falling from the tree. There’s a flight from sovereign debt issuers that have suspect national finances.”

Sullivan said there was “outright panic” among investors who feared they would lose some of their principal if Greece restructured or defaulted on its debt.

WUPPERTAL, Germany, April 25 (Reuters) – Wuppertal’s theatre was a beacon of hope for a new age of creativity when built in West Germany’s post-war boom. Today it is in trouble, a symbol of the bankruptcy threatening cities in Germany’s biggest state.

North Rhine-Westphalia (NRW), home to more than one in five Germans, holds a state election on May 9 which is increasingly overshadowed by debt worries that could create serious problems for Chancellor Angela Merkel’s centre-right government.

Merkel’s coalition of Christian Democrats (CDU) and pro-business Free Democrats (FDP) must hold NRW to retain the majority in the Bundesrat (upper house of parliament) they need to carry out planned tax cuts and health service reforms.

However, with towns and cities forming the backbone of its industrial heartland sinking deeper and deeper into the red, voters and lawmakers on both sides of the political divide say Germany has all but exhausted room to manoeuvre fiscally.

“We’re only looking at the tip of the iceberg,” said Gerd Langguth, a political scientist at Bonn University. “Behind municipal finances is the whole question of federal policy.”

Growing discontent about west German financial aid to former East Germany, population decline and Europe’s economic woes have fed political disillusionment that could hobble Merkel’s government and deepen splits between Berlin and the regions.

Wuppertal and North Rhine-Westphalia as a whole have traditionally backed the opposition Social Democrats (SPD).

BERLIN (Reuters) – Facing domestic opposition to a Greek rescue, German Chancellor Angela Merkel will push hard to ensure Greece’s appeal for financial aid from the International Monetary Fund and the euro zone remains a one-off.

Greek Prime Minister George Papandreou’s call for help out of Greece’s debt crisis puts pressure on Merkel, who has sought to delay any financial support until the last minute. According to people familiar with the plans, conditions for the bailout are largely set in stone for 2010, but it is not clear how aid could work from next year or for other nations.

* Merkel may have to back the aid ahead of a key regional test of her popularity on May 9, when voters go to the polls in North Rhine-Westphalia. If Merkel’s center-right coalition fails to hold Germany’s most populous state, it will lose its majority in the upper house of parliament, threatening plans to cut taxes and reform the health service.

* However, despite threatening to slow down the approval process, the main opposition Social Democrats are unlikely to benefit from the situation as they have signaled their support for Greek aid.

* To discourage other heavily indebted nations from following Greece’s lead, Merkel may seek to ensure the Greek deal does not become a template for future rescues, and she is likely to maintain a tough stance on any subsequent support.

* The chancellor will try to remain as vague as possible on specific aid commitments, although her resistance to issuing checks to Athens is already well documented.

* Wary of losing its influence on European policy, Merkel’s government will probably step up efforts to tighten budgetary discipline inside the euro zone to avoid future crises.

BERLIN (Reuters) – Chancellor Angela Merkel travels to the United States for a four-day trip Monday aiming to address Iran’s nuclear program and burnish her global credentials ahead of a crucial regional election in Germany.

Merkel aims to help build consensus over nuclear security at an April 12-13 summit in Washington hosted by U.S. President Barack Obama, then head west, where she is due to visit Hollywood, businesses and leading universities in California.

Government officials say efforts to reach agreement on sanctions against Iran’s nuclear program are likely to feature prominently in Merkel’s talks with world leaders in Washington.

Her ruling coalition has also been debating whether Germany could accept inmates from the U.S. camp in Guantanamo Bay, and media reports suggested Merkel might discuss this with Obama.

Political scientist Hans Vorlaender of the University of Dresden said the United States would serve as a stage for Merkel to play to her home audience in the run-up to the May 9 vote in North Rhine-Westphalia (NRW), Germany’s most populous state.

The fact that Obama had recently chalked up successes such as a bill on health reform and a landmark deal on disarmament with Russia, could only help Merkel, Vorlaender added.

“She wants to shine as a global politician and some of the glow surrounding Obama’s recent achievements should wash off,” he said. “So this will be a meeting of two power brokers.”