BERLIN, Nov 26 (Reuters) – Euro zone nations and its central bank are urging Portugal to apply for a financial bailout from a European rescue fund, Financial Times Deutschland reported on Friday.

Without revealing its sources, the paper said a majority of euro zone countries and the European Central Bank were putting pressure on Portugal to follow Ireland and Greece and seek aid in order to save Spain — European Union’s fifth-largest economy – from having to do the same.

The paper quoted a source in Germany’s finance ministry as saying: “If Portugal were to use the fund, it would be good for Spain, because the country is heavily exposed to Portugal.”

The German Finance Ministry could not immediately be reached for comment on the report which suggested that despite public displays of confidence, euro area leaders were alarmed at the prospect of the debt crisis engulfing ever more of its members.

Many analysts believe Portugal will be the next nation to seek assistance from the EU’s 750 billion euro rescue fund, and there are fears that Spain might be forced to follow suit.

On Thursday, top EU officials sought to assure markets that there was no risk of the euro zone breaking up after investors, stung by Ireland’s debt crisis, pushed the borrowing costs of Portugal and Spain to record highs.

German Chancellor Angela Merkel, who unsettled markets by her comment this week that the euro was in an “exceptionally serious” situation, said she was confident the euro area would emerge stronger from the crisis.

BERLIN (Reuters) – Euro zone nations and its central bank are urging Portugal to apply for a financial bailout from a European rescue fund, Financial Times Deutschland reported on Friday.

Without revealing its sources, the paper said a majority of euro zone countries and the European Central Bank were putting pressure on Portugal to follow Ireland and Greece and seek aid in order to save Spain — European Union’s fifth-largest economy — from having to do the same.

The paper quoted a source in Germany’s finance ministry as saying: “If Portugal were to use the fund, it would be good for Spain, because the country is heavily exposed to Portugal.”

The German Finance Ministry could not immediately be reached for comment on the report which suggested that despite public displays of confidence, euro area leaders were alarmed at the prospect of the debt crisis engulfing ever more of its members.

Many analysts believe Portugal will be the next nation to seek assistance from the EU’s 750 billion euro rescue fund, and there are fears that Spain might be forced to follow suit.

On Thursday, top EU officials sought to assure markets that there was no risk of the euro zone breaking up after investors, stung by Ireland’s debt crisis, pushed the borrowing costs of Portugal and Spain to record highs.

German Chancellor Angela Merkel, who unsettled markets by her comment this week that the euro was in an “exceptionally serious” situation, said she was confident the euro area would emerge stronger from the crisis.

BERLIN, Nov 23 (Reuters) – Caps must be set on the amount of debt lenders can hold if European governments are serious about ending what threatens to become a cycle of country bailouts to rescue ailing banks, a German government advisor said on Tuesday.

Jan Pieter Krahnen, a professor of finance at the University of Frankfurt, said in an interview with Reuters that a “vicious circle” of banks loading up on risky debt may already have taken root due to “non-existent but much-needed rules” on asset holdings.

As euro zone markets continued to slide on Tuesday on mounting fiscal and political uncertainties focused on Ireland’s banking sector and bailout plans, Krahnen said that, because of their importance to the financial system, banks would continue to take excessive risks as long as they knew they would be bailed out if necessary.

Banks and regulators have locked horns over implementation of the Basel III framework of reforms designed to ensure lenders have enough capital to withstand future downturns. Banks in Europe say too much red tape will prevent them from providing financing to companies, killing off a nascent economic recovery. [ID:nLDE6AI0XL]

Krahnen said a big reason for a jump in banking risk was that prices had been distorted by cheap money from central banks.

“When spreads on debt start to rise because default becomes more likely, the only institution likely to be interested in buying this type of debt are banks,” he said.

“Why? Because banks are a safe haven for such debt since theirs will most likely be redeemed.”

BERLIN, Nov 23 (Reuters) – Caps must be set on the amount of debt lenders can hold if European governments are serious about ending what threatens to become a cycle of country bailouts to rescue ailing banks, a German government advisor said on Tuesday.

Jan Pieter Krahnen, a professor of finance at the University of Frankfurt, said in an interview with Reuters that a “vicious circle” of banks loading up on risky debt may already have taken root due to “non-existent but much-needed rules” on asset holdings.

As euro zone markets continued to slide on Tuesday on mounting fiscal and political uncertainties focused on Ireland’s banking sector and bailout plans, Krahnen said that, because of their importance to the financial system, banks would continue to take excessive risks as long as they knew they would be bailed out if necessary.

Banks and regulators have locked horns over implementation of the Basel III framework of reforms designed to ensure lenders have enough capital to withstand future downturns. Banks in Europe say too much red tape will prevent them from providing financing to companies, killing off a nascent economic recovery. [ID:nLDE6AI0XL]

Krahnen said a big reason for a jump in banking risk was that prices had been distorted by cheap money from central banks.

“When spreads on debt start to rise because default becomes more likely, the only institution likely to be interested in buying this type of debt are banks,” he said.

“Why? Because banks are a safe haven for such debt since theirs will most likely be redeemed.”

BERLIN (Reuters) – Germany said on Wednesday it had strong evidence Islamist militants were planning attacks in the next two weeks and ordered security at potential targets such as train stations and airports to be tightened.

Interior Minister Thomas de Maiziere said details of the plot emerged after parcel bombs were dispatched from Yemen to U.S. targets at the end of October, and separate postal bombs by suspected Greek militants were sent to prominent figures including Chancellor Angela Merkel.

At a news conference hastily convened at his ministry in Berlin, de Maiziere said the security threat in Germany had risen and that intelligence services had received concrete indications that attacks were planned at the end of November.

“There are grounds for concern but not for hysteria,” said the minister. “We have obtained further relevant information in addition to the previous findings which … justify the view that we are now dealing with a new situation.”

The government did not give details of the plot but a German media report said security officials suspected a number of al Qaeda operatives were planning attacks in Britain and Germany.

De Maiziere said he had instructed German police to step up security measures around the country at potential targets like airports and railway stations, noting that the findings showed Islamic militants were still planning attacks against Germany.

“Citizens will be able to see such police measures. In addition to this, there are a lot of measures that they won’t be able to see,” he said. “This will apply until further notice.”

BERLIN, Nov 12 (Reuters) – German Chancellor Angela Merkel denied on Friday she was planning to replace Finance Minister Wolfgang Schaeuble, who has been under growing pressure to step down because of concerns his health is interfering with the job.

Speaking to German television ARD at a meeting of the Group of 20 economic powers in Seoul, Merkel rejected a newspaper report that she was preparing a cabinet reshuffle.

“I have worked together with Wolfgang Schaeuble here excellently and intend to continue to do so,” she said.

Business daily Handelsblatt said that Merkel was lining up Interior Minister Thomas de Maiziere as a replacement, and that she planned to float the idea when her conservative Christian Democrats (CDU) hold a party congress from Nov. 14-16.

The paper quoted an unnamed member of the CDU leadership as saying time was running out for the 68-year-old Schaeuble.

“The question is no longer whether Wolfgang Schaeuble is replaced, it’s ‘When is the right moment?’,” the official said.

Schaeuble, a former CDU leader, has been wheelchair-bound since he was shot by a mentally ill man in 1990.

BERLIN (Reuters) – German police Tuesday intercepted a package containing explosives sent from Greece to Chancellor Angela Merkel’s office in Berlin after a series of parcel bomb attacks in Athens by suspected Greek guerrillas.

Addressed to Merkel personally, the suspect parcel was found in the mailroom of her chancellery while she was out of the country in Belgium, the government said.

Interior Minister Thomas de Maiziere said the package contained explosives, was sent from Greece two days ago and appeared to be linked to the other parcel bombs.

“From all that we know it was built the same way and looked the same as…the one in the Swiss embassy in Athens and presumably the other parcels too,” he told a news conference.

Security experts rendered the package harmless and no one was hurt, though the government said it appeared to have been “capable of harming people.” German media said it contained gunpowder and listed the “Greece Economy Ministry” as its return address.

“We don’t yet have final results on how dangerous the explosive was and what it was made of,” De Maiziere said.

“However, there’s quite a lot to suggest that if it’s the same as the parcel bombs from Athens it could have caused a not inconsiderable amount of damage,” he added.

BERLIN (Reuters) – Chancellor Angela Merkel said on Saturday more people of immigrant stock should work for the state in Germany, where a fractious debate about the integration of Muslims has been raging for weeks.

Fueled by divisive comments about Turks and Arabs by central banker Thilo Sarrazin and his book “Deutschland schafft sich ab” (Germany does away with itself), the country has been debating how to balance an economic need for more workers with growing public concern over integration of immigrants.

Interviewed by a 31-year-old Berlin policeman of Turkish origin for her latest internet podcast four days ahead of an integration summit at her chancellery, Merkel said:

“Today, people with a migrant background are under- represented in the public sector, and that needs to change.”

However, Merkel — who earlier this month declared that multiculturalism had “utterly failed” in Germany — conceded that this was not always easy.

“I’ve also noticed that if someone has a name that doesn’t sound German they can often have trouble being taken on at all in some professions,” the chancellor said.

Since Sarrazin inflamed opinion by asserting Turks and Arabs sponged off the state and refused to integrate, some of Merkel’s conservatives become more critical of Muslims, who make up an estimated 4 million of Germany’s 82 million population.

BERLIN, Oct 29 (Reuters) – German media offered guarded praise for an agreement in Brussels to make limited changes to the EU treaty, describing it as a compromise that bought time to find a lasting remedy to debt woes that have plagued the bloc.

Under pressure from Chancellor Angela Merkel and French President Nicolas Sarkozy, EU leaders in Brussels agreed that changes were needed to create a permanent system to handle sovereign debt problems and endorsed tougher budgetary rules, including sanctions on profligate states. [ID:nLDE69I1FB]

Facing public hostility to a bailout of Greece and the creation of massive rescue fund designed to protect the euro currency, Merkel had insisted on the option of suspending voting rights for budget sinners and alterations to the treaty.

Business daily Handelsblatt said the consensus reached on treaty changes was a significant achievement, calling it a “breakthrough” for Merkel, whose centre-right coalition has suffered a record drop in support in its first year in office.

But Berlin failed to win widespread support for demands to suspend the voting rights of member states which breach the rules. This would have required more radical treaty change, backed by public referendums, and was put on the backburner.

This meant this plan was “pretty much off the table for the time being,” wrote daily Frankfurter Allgemeine Zeitung.

As a result, the deal reached in Brussels amounted to “lite solution” to the problem of ensuring budgetary discipline, said German newspaper Hannoversche Allgemeine Zeitung.

BERLIN (Reuters) – German Chancellor Angela Merkel said on Wednesday there could be no guarantee of stability in the euro zone without changes to the European Union treaty, brushing aside European Commission criticism of her plans.

Merkel, whose deal with French President Nicolas Sarkozy to press for changes to the bloc’s treaty to enforce tougher budgetary rules was branded “completely irresponsible” by a senior EU commissioner, struck a defiant tone in parliament ahead of an EU summit.

She told the Bundestag lower house that a task force headed by European Council President Herman van Rompuy had drawn up important reforms to improve financial stability, but that they did not go far enough to safeguard the euro.

“Even with the toughest stability sanctions, we cannot rule out 100 percent that we will one day face an extreme crisis again that threatens the overall stability of the euro zone,” Merkel said in a government declaration.

Only with a “robust” new rescue mechanism could the bloc safeguard the stability of the euro zone.

“The new rescue mechanism has to be legally sound. This will only succeed if there is a change in the EU treaties.”

Merkel and Sarkozy last week agreed on changes to enable the suspension of voting rights of member states that seriously violate the principles of Economic and Monetary Union (EMU).