BERLIN (Reuters) – German Chancellor Angela Merkel’s government called for unity on Thursday after rebels forced a humiliating vote over the presidency that could lead to a watering down of her austerity package.

The struggle to get Christian Wulff elected to the largely ceremonial post of head of state on Wednesday, even when Merkel had a clear majority on paper, showed growing disenchantment with the leadership of her nine-month-old center-right alliance.

Analysts said party cadres sent a clear message to Merkel that she needed to make major changes and possibly tone down her recent 80 billion euro austerity drive, criticized at home as unfair and abroad as likely to hinder the world recovery.

Coming in the wake of a series of resignations that deprived Merkel’s Christian Democratic Union of its most experienced figures — as well as Horst Koehler’s sudden departure from the presidency after comments he made while visiting German troops in Afghanistan — the vote cast doubts on her future.

Dozens of members of parliament from Merkel’s coalition twice voted against Wulff, in the special assembly, with most of the rebels only obeying in the third round when Merkel and her two top coalition partners made a personal plea for unity.

“The coalition has to improve its teamwork. Now we’ve got a chance to show that. We’ve got the message: we’ve got to start working better as a coalition,” said the second in charge of Merkel’s CDU, Hermann Groehe, on German television.

Some newspapers called it a “disaster” for the government and especially Merkel and her main ally, Guido Westerwelle of the liberal Free Democrats, who is her foreign minister.

BERLIN, June 30 (Reuters) – Rebels inside German Chancellor Angela Merkel’s coalition made her endure three rounds of voting before securing the presidency for her candidate on Wednesday, in a dramatic display of disenchantment with her leadership.

Merkel’s conservative candidate Christian Wulff beat Joachim Gauck, a non-partisan civil rights campaigner fielded by the centre left, only after a marathon session of a special assembly to choose the largely ceremonial head of state.

For only the third time in post-war history a German presidential election went to a third round, in what analysts called a slap in the face for chancellor, who has struggled to assert her authority on the nine-month-old coalition.

“At the end of the day we had a very convincing result,” said Merkel, while her ally Guido Westerwelle of the liberal Free Democrats said other presidents had been elected after three rounds “and became great figures in the republic”.

But Merkel was deprived of the decisive victory she needed to counter setbacks including high-profile resignations on the centre-right — such as Horst Koehler’s surprise departure as president in May — and criticism at home and abroad of her leadership in the financial crisis and recent austerity drive.

With her approval ratings already at record lows before the vote, Merkel is now likely to face serious questions about her ability to lead Europe’s economic powerhouse, just as the world looks to Germany to help it emerge from recession.

“It is indeed a big defeat, a significant number of people clearly left the government’s camp and voted for Gauck,” said political scientist Peter Loesche. “Today was supposed to be a big positive sign for the coalition, now the opposite is true.”

BERLIN, June 30 (Reuters) – Chancellor Angela Merkel’s conservative candidate failed to win an absolute majority in the first round of Germany’s presidential election on Wednesday, forcing the vote into a second round.

Merkel desperately needs a clear victory in the federal assembly that elects the head of state to boost her authority after a series of poor showings in opinion polls and setbacks including the resignation of Horst Koehler as president in May.

Her centre-right coalition’s candidate, Christian Wulff, went into the contest with an absolute majority on paper. But the centre-left’s candidate, popular civil rights activist and Protestant Pastor Joachim Gauck, has strong cross-party appeal.

The ruling coalition has 644 seats in the special assembly, well over the 623 needed for an absolute majority, but only 600 voted on the first ballot for Wulff, meaning that some on the government benches voted for the opposition candidate.

“It is more exciting than anyone expected. It looks like a lot of people wanted to send Merkel a message,” said Frank-Walter Steinmeier, parliamentary leader of the opposition centre-left Social Democrats (SPD).

Gauck scored 499 votes — 39 more than the number of Social Democratic and Green assembly members — and leftist Luc Jochimsen won 126 votes.

The assembly electing the largely ceremonial head of state was due to vote again shortly. If it goes to a third round, only a simple majority is needed to win.

BERLIN (Reuters) – The German government will check how banking laws can be interpreted or changed so that stress tests can be made public, but will rely on peer pressure rather than forcing reluctant lenders to disclose, it said on Friday.

The German government will not oblige banks to reveal test results but they will feel “high pressure to disclose because the markets see who has published and who hasn’t”, said German Finance Ministry spokesman Michael Offer.

German law currently prevents lenders from being obliged to disclose such information but the country is now, along with its European Union partners, in favour of making such data public to help restore shaken confidence in the banking industry.

Leaders of the 27-member EU agreed unexpectedly on Thursday to carry out more transparent checks of the financial health of their top banks as part of measures to convince investors that Europe can contain the euro zone debt crisis.

The finance ministry spokesman, asked by Reuters at a news conference about paragraph nine of the German law on banks which refers to data protection and disclosure, responded: “I can only say that we must check it further.”

“I believe that paragraph nine applies to individual finance institutions and also we have to see in what form this paragraph nine would permit publication, or rather what needs changing in order to meet the goals that were discussed yesterday,” he said.

Asked if the government would rely on voluntary disclosure by banks or wanted the law changed, he said: “The idea of making this voluntary played a role, I believe, yesterday evening (at the EU summit), if I’ve understood the statement correctly.”

BERLIN/MADRID, June 16 (Reuters) – Spain’s central bank will publish stress tests on its lenders and Germany is coordinating disclosure at EU level, moving Europe’s banking sector closer to putting its financial health on public display.

After media leaks that Madrid was keen on disclosure of stress tests on banks to dispel rumours it is about to seek Greek-style aid, the Bank of Spain said on Wednesday it would publish them in the near future. [ID:nMDT009114]

A day ahead of a European Union summit likely to focus on regulatory matters, Germany’s finance ministry quickly responded that it was coordinating the issue with EU partners. Bankers said the two countries might jointly provide the impetus for action on a European scale.

“If Germany supports Spain in its push, the debate in the EU gets a special dynamic which makes publication more likely,” said one European banking source.

Spain’s banks have largely weathered the financial crisis but the capital of the country’s 45 savings banks has been eroded by exposure to property and construction. Listed and savings banks have about 400 billion euros in property-related debts on their books.

“The stress tests are to prove that all banks have sufficient capital to cope with economic growth scenarios, which at present seem most reasonable, but also future complicated growth scenarios,” Spanish Central Bank Governor Miguel Angel Fernandez Ordonez said in a speech.

Banks in Spain and the rest of the European Union have been undergoing tests, carried out by the bloc’s 27 national banking regulators, on their ability to withstand liquidity problems.

BERLIN, June 15 (Reuters) – A damning poll of leading German decision-makers with 92 percent voicing disappointment in Angela Merkel’s government piled pressure on the chancellor after a slew of criticism from politicians and media and poor polls.

The survey for Capital magazine of 750 top politicians and executives carried out in late May and early June showed a sharp deterioration in the centre-right chancellor’s image, largely in step with her declining fortunes in broader opinion polls.

More than three quarters believe her coalition government is too weak to confront the current crisis and half consider Merkel herself a weak leader — an increase of 25 points on the last survey in December 2009.

The survey result is particularly damning as more than 80 percent of those polled see the economy sustaining its present upswing — but 69 percent are unhappy with the government’s economic policies compared to 37 percent in December.

The chancellor is already under fire from members of her own government of conservatives and the pro-business Free Democrats (FDP) over an austerity drive announced a week ago, and faces an unexpected challenge to get her presidential candidate elected.

Several German and foreign papers say her government is in crisis as the mounting list of problems, including tackling the euro zone crisis, give the impression she is not in control.

“The government is at an end. But it does not have the strength to resign nor is it being challenged by an opposition willing to govern,” wrote Mike Hanke, a columnist in business daily Handelsblatt who often takes a negative view of Merkel.

LUXEMBOURG/BERLIN (Reuters) – European finance ministers sought to calm nervous markets on Monday by nailing down details of a massive financial safety net for the euro zone as Germany unveiled new budget cuts it hopes will set an example for its partners in the bloc.

German Chancellor Angela Merkel’s coalition agreed to pursue savings of 11.2 billion euros next year, part of a multi-year package of 80 billion designed to restore investor confidence in the finances of the 16-nation currency bloc.

Citing diary problems, however, Merkel postponed crucial talks with French President Nicolas Sarkozy on reforming the euro zone’s governance, in a possible sign of differences between the cofounders of the single currency.

Ministers from the 16 nations that share the euro met to approve arrangements to allow a Special Purpose Vehicle to raise up to 440 billion euros to lend to euro zone nations that run into Greek-style payments problems.

“I am confident we will have an agreement today on the SPV,” European Economic and Monetary Affairs Commissioner Olli Rehn told reporters on arriving for the meeting.

He said ministers would also discuss “the fiscal exit strategy (from economic stimulus measures) because it is evident that many countries need to accelerate fiscal consolidation”.

Outside the euro zone, British Prime Minister David Cameron told Britons the scale of the country’s budget problems was even worse than he had anticipated and Greece’s debt crisis showed the perils facing governments that fail to act.

BERLIN, June 7 (Reuters) – German Chancellor Angela Merkel’s coalition agreed a package of budget cuts and taxes on Monday to bring the structural deficit of Europe’s biggest economy within EU limits by 2013 and revive her political fortunes.

The measures, touted as Germany’s biggest austerity drive since World War Two, should save 11.1 billion euros ($13.25 billion) next year and lower a deficit set to exceed 5 percent of gross domestic product this year.

Planned savings will rise to 17.1 billion euros in 2012, 25.7 billion euros in 2013 and 32.4 billion the following year, said Guido Westerwelle, head of Merkel’s coalition partners, the Free Democrats (FDP). This is expected to reduce the deficit to below the EU limit of 3 percent of GDP.

“We must save about 80 billion euros by 2014 so that our finances can stand on their own two feet in the future,” Merkel told a joint news conference with Westerwelle, presenting the results of a two-day budget conclave.

“The last few months have shown, together with Greece and other euro states, how important it is to have solid finances,” said Merkel, who must get the savings package approved in order to boost her standing, which is flagging in opinion polls.

While confirming there would be there would be no tax cuts in this legislature, the centre-right government avoided raising income tax or eliminating any discounted VAT rates.

RECOVERY AND REPUTATION AT STAKE

BERLIN, May 21 (Reuters) – British Prime Minister David Cameron told Germany on Friday that Britain needs a stable euro currency, although he would not agree to any EU treaty changes that drew Britain further into supporting the euro.

“Britain is not a member of the euro nor are we likely to become a member of the euro, but we want a strong and stable euro zone,” said Cameron. “That is where 50 percent of our trade goes and it is in our interests that that takes place.”

Cameron met German Chancellor Angela Merkel in Berlin and made Germany his second foreign destination as British leader after visiting Paris the previous day.

At their joint news conference, Merkel, who spooked money markets this week by saying the “euro is in danger”, said she and Cameron had “talked about how important a stable euro also is for countries who don’t belong to the euro zone”.

Germany caused market mayhem earlier this week by acting alone, and without consulting its European Union partners, to ban naked sort selling of certain financial instruments, which helped push the euro to a four-year low and routed stocks.

Cameron, asked whether he planned to imitate this ban, replied: “In Britain it would be a matter for the Financial Services Authority and obviously we should respect each others’ decisions on these issues.”

Some of Germany’s euro zone partners were less phlegmatic, with the French government and European Commission voicing irritation at the unilateral move, and U.S. Treasury Secretary Timothy Geithner saying such measures tended to be unhelpful.

BERLIN (Reuters) – Germany’s go-it-alone attack on risky financial bets may have taken both the markets and its EU partners by surprise, but domestic pressure on Chancellor Angela Merkel to some extent made such a move inevitable.

The European Commission and Paris were peeved not to have been consulted on the overnight ban on naked short selling of some assets, and shaken markets said it came “out of the blue.”

But Merkel was under pressure from her own conservative party to push not only for a Europe-wide tax on financial transactions to cover the cost of the crisis, but also specifically for a naked short-selling ban.

“The room for maneuver that Mrs Merkel has is not as big as many people think,” Gerd Langguth, a political scientist at Bonn University and a Merkel biographer, told Reuters.

In recent weeks Merkel has been criticized at home for her hesitant response to the Greek debt crisis, evicted from power in North Rhine-Westphalia state and trumped by France’s Nicolas Sarkozy on the rescue package for the euro.

Political analyst Franz Decker said the latest initiative showed Merkel was “a fair weather chancellor whose leadership qualities were not seriously tested in her first term in office.”

Good external conditions during her 2005-2009 first term at the head of a stronger Grand Coalition with the Social Democrats (SDP) helped her cope with the banking crisis after the Lehmans collapse, he said.