BERLIN, Dec 16 (Reuters) – Eurosceptics in Germany’s Free Democrats (FDP) lost an internal party vote on a permanent euro zone bailout scheme, the leader of the ruling coalition party said on Friday, removing a threat to Chancellor Angela Merkel’s leadership and European policy.

“The FDP remains clearly focused on a pro-European stance,” party leader Philipp Roesler said, adding that a failure to meet the quorum of a third of party members made the referendum questioning the European Stability Mechanism (ESM) invalid.

A majority vote against the ESM could have prevented the FDP from backing Merkel on crucial euro issues and even brought down her coalition, bringing forward the 2013 elections at a time when the opposition centre-left looks a real threat to her.

Roesler, 38, appeared to have narrowly averted a threat to his own leadership, only half a year after taking over from unpopular Foreign Minister Guido Westerwelle.

With just under 32 percent of party members voting, the FDP backbencher Frank Schaeffler got 44.2 percent support for his anti-ESM motion. It remained to be seen how the party leadership would interpret the result, beyond the initial claim of victory.

The FDP has been a liability for Merkel since helping her to a second term with its record performance in a 2009 election.

Its unpopular leaders and failure to deliver on promised tax cuts have dragged the party below the 5 percent threshold needed to win seats in the Bundestag lower house of parliament, polls show.

BERLIN (Reuters) – Praise for Angela Merkel’s tough negotiating skills in forcing through a deal on European budget rules has given way to warnings that the chancellor risks using up her political credit among Germans.

Britain’s rejection of last week’s agreement, backed by the EU’s other 26 leaders, gave Merkel respite from foreign media caricatures casting her as a Kaiser or Fuehrer intent on dominating Europe.

But she won only fleeting relief, as U.S. magazine Newsweek brought out a cover warning: “Achtung! It’s Angela!”

While mainland Europe looks aghast at Britain’s growing euroscepticism, polls suggest Germans are growing weary of the euro zone and are less impressed by their chancellor’s crisis management than post-summit headlines first suggested.

Even her allies warned Merkel not to assume easy passage of decisions taken at the summit, such as handing over some budget sovereignty to Brussels and moving up the launch of the euro zone’s permanent bailout mechanism by a year, to mid-2012.

“The Bundestag (parliament’s lower house) will study whether constitutional problems could arise from the EU Commission or a European currency commissar intervening directly in national budgets and parliament’s control of the budget,” said Bundestag speaker Norbert Lammert from Merkel’s Christian Democrats.

In a country whose Constitutional Court subjects such things to close scrutiny, Lammert called it “very ambitious” to expect parliament to approve the new bailout fund, or European Stability Mechanism, fast enough to bring it into effect a whole year ahead of schedule.

BERLIN (Reuters) – Praise for Angela Merkel’s tough negotiating skills in forcing through a deal on European budget rules has given way to warnings that the chancellor risks using up her political credit among Germans.

Britain’s rejection of last week’s agreement, backed by the EU’s other 26 leaders, gave Merkel respite from foreign media caricatures casting her as a Kaiser or Fuehrer intent on dominating Europe.

But she won only fleeting relief, as U.S. magazine Newsweek brought out a cover warning: “Achtung! It’s Angela!”

While mainland Europe looks aghast at Britain’s growing euroscepticism, polls suggest Germans are growing weary of the euro zone and are less impressed by their chancellor’s crisis management than post-summit headlines first suggested.

Even her allies warned Merkel not to assume easy passage of decisions taken at the summit, such as handing over some budget sovereignty to Brussels and moving up the launch of the euro zone’s permanent bailout mechanism by a year, to mid-2012.

“The Bundestag (parliament’s lower house) will study whether constitutional problems could arise from the EU Commission or a European currency commissar intervening directly in national budgets and parliament’s control of the budget,” said Bundestag speaker Norbert Lammert from Merkel’s Christian Democrats (CDU).

In a country whose Constitutional Court subjects such things

PARIS/BERLIN (Reuters) – British Prime Minister David Cameron threatened on Friday to obstruct a Franco-German drive for swift change to the European Union’s treaty, a sign of the difficulty leaders will face transforming Europe to to save the euro.

France and Germany are reaching a consensus that euro zone economies need to be bound more closely together if the single currency is to survive, which could mean changing the EU treaty to give Brussels powers to punish spendthrift euro states.

Austrian Chancellor Werner Faymann said there was a danger that the euro zone bloc would split up unless it implemented new rules and stuck to them.

“When we are not able to set up and keep to more conditions and ground rules, then many countries in the euro zone will no longer be able to pay the very high rates for sovereign bonds,” he told the daily Krone.

“The next effect will be that you won’t find anyone to buy them. Then the euro zone has to break up because of this…. it is a very real danger.”

After talks with French President Nicolas Sarkozy, Cameron said he was not convinced treaty change was needed to reinforce the single currency zone, which Britain has refused to join. If the 27-nation bloc’s charter were reopened at a crunch summit on December 9, he would have his own agenda.

The British leader said euro zone institutions such as the European Central Bank needed to “get behind the currency” to convince markets that it had the required firepower, and member states had to make their economies more competitive.

BERLIN/PARIS, Dec 2 (Reuters) – German Chancellor Angela Merkel vowed on Friday to defend the euro, which she said was stronger than Germany’s former deutschemark, but she warned that Europeans faced a long, hard “marathon” to restore lost credibility.

“Resolving the sovereign debt crisis is a process and this process will take years,” Merkel said in an address to parliament.

She called for a long-term approach to tighter fiscal integration in the euro zone, with tougher budget discipline, and dismissed the possibility of massive Fed-style money printing by the European Central Bank.

“The European Central Bank has a different task from that of the U.S. Fed or the Bank of England,” the German leader said.

However the Sueddeutsche Zeitung daily said Merkel was willing to see the ECB step up its buying of troubled euro zone countries’ bonds as a bridging solution until budget controls took hold.

Speaking a week before a European Union summit seen as make-or-break for the 17-nation single currency area, Merkel ruled out issuing common euro zone bonds as a crisis solution, saying that would breach the German constitution.

Instead, she called for a mixture of greater European powers to control national budgets, to be enshrined in treaty changes, and smart use of the euro zone rescue fund to stabilise markets.

BERLIN, Dec 2 (Reuters) – The euro zone debt crisis cannot be solved overnight, German Chancellor Angela Merkel said on Friday, urging instead a long-term approach that relies on tougher fiscal rules being enshrined in European treaties.

A week before European leaders meet in Brussels for what is being seen as a make-or-break summit for the 13-year-old single currency bloc, Merkel once again rejected the idea of joint euro zone bonds and cautioned against steps that might hurt the credibility of the European Central Bank.

“The government has made clear that the European debt crisis can’t be solved in one fell swoop overnight. There is no miracle solution. There is no easy, rapid solution,” Merkel told parliament. “Resolving the sovereign debt crisis is a process and this process will take years.”

She is under growing pressure to take bolder steps to resolve a crisis that has spread like a virus from Greece, Portugal and Ireland to the very core of Europe, raising questions about whether the bloc can survive intact.

Merkel likened the battle to contain the crisis to a marathon, warning Europe against speeding from the start line with measures that would come back to haunt it before the finish line was reached.

“Marathon runners often say that the run becomes especially difficult at the 35 kilometre mark, but they also say that reaching the finish line is possible if you are conscious of the full challenge from the very start and approach it accordingly,” Merkel told lawmakers in the Bundestag lower house.

“The one who starts fastest isn’t necessarily the most successful. It is the one who is aware of what is involved in running the full distance.”

BERLIN/BRUSSELS (Reuters) – Germany and France stepped up a drive on Monday for coercive powers to reject euro zone members’ budgets that breach EU rules, and the United States kept up the drumbeat of demands from the rest of the world for decisive action.

The OECD rich nations’ economic think-tank said the European Central Bank should cut interest rates and abandon its reluctance to step up purchases of government bonds in order to restore confidence in the euro area, which now posed the main risk to the world economy.

The ECB shows no sign of doing so yet. It bought 8.5 billion euros of euro zone government debt in the latest week, at a time of acute turmoil, in line with its previous activity but well short of what economists say is necessary to turn market sentiment around.

President Barack Obama said the European crisis was a “huge issue” for the U.S. economy after meeting top European officials Herman Van Rompuy and Jose Manuel Barroso in Washington.

White House spokesman Jay Carney said Obama’s message behind closed doors was that “Europe needs to take decisive action, conclusive action to handle this problem, and that it has the capacity to do so”.

In Brussels, finance ministers of the 17-nation currency area meeting on Tuesday are due to approve detailed arrangements for scaling up the European Financial Stability Facility rescue fund to help prevent contagion in bond markets, and release a vital aid lifeline for Greece.

The signs are the EFSF may not have enough clout, leaving the onus firmly on the ECB. Sources have said the Obama administration has urged Europe to allow the ECB to act as lender of last resort as the U.S. Federal Reserve does.

BERLIN/BRUSSELS (Reuters) – Germany and France stepped up a drive on Monday for intrusive powers to reject national budgets in the euro zone that breach EU rules, as a market rout of European debt eased temporarily on hopes of outside help for Italy and Spain.

The OECD rich nations’ economic think-tank said the European Central Bank should cut interest rates and step up its purchases of government bonds to restore confidence in the euro zone, which it said now posed the main risk to the world economy.

In Brussels, finance ministers of the 17-nation currency area meeting on Tuesday are due to approve detailed arrangements for scaling up the European Financial Stability Facility rescue fund to help prevent contagion spreading in bond markets, and to release a vital aid lifeline for Greece.

Berlin and Paris aim to outline proposals for a fiscal union before a European Union summit on December 9 increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area.

“We are working intensively for the creation of a Stability Union,” the German Finance Ministry said in a statement. “That is what we want to secure through treaty changes, in which we propose that the budgets of member states must observe debt limits.”

It also dismissed a report by the newspaper Die Welt that Germany and the five other euro zone states with top-notch AAA credit ratings could issue joint bonds.

Finance Minister Wolfgang Schaeuble acknowledged on Sunday that it may not be possible to get all 27 EU member states to back treaty amendments, saying agreement should be reached among the 17 euro zone members.

BERLIN/BRUSSELS, Nov 28 (Reuters) – Germany and France stepped up a drive on Monday for intrusive powers to reject national budgets in the euro zone that breach EU rules, as a market rout of European debt eased temporarily on hopes of outside help for Italy and Spain.

The OECD rich nations’ economic think-tank said the European Central Bank should cut interest rates and step up its purchases of government bonds to restore confidence in the euro zone, which it said now posed the main risk to the world economy.

In Brussels, finance ministers of the 17-nation currency area meeting on Tuesday are due to approve detailed arrangements for scaling up the European Financial Stability Facility rescue fund to help prevent contagion spreading in bond markets, and to release a vital aid lifeline for Greece.

Berlin and Paris aim to outline proposals for a fiscal union before a European Union summit on Dec. 9 increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area.

“We are working intensively for the creation of a Stability Union,” the German Finance Ministry said in a statement. “That is what we want to secure through treaty changes, in which we propose that the budgets of member states must observe debt limits.”

It also dismissed a report by the newspaper Die Welt that Germany and the five other euro zone states with top-notch AAA credit ratings could issue joint bonds.

Finance Minister Wolfgang Schaeuble acknowledged on Sunday that it may not be possible to get all 27 EU member states to back treaty amendments, saying agreement should be reached among the 17 euro zone members.

BERLIN (Reuters) – German business sentiment rose unexpectedly in November for the first time in nearly half a year, suggesting Europe’s largest economy is weathering the euro zone debt crisis and turmoil in international markets better so far than experts had feared.

A day after weak demand for a German bond auction raised concern the crisis may be spreading to Europe’s economic powerhouse, the closely-watched Ifo business climate index bucked expectations to rise for the first time since June.

The Munich-based Ifo think-tank’s index, based on a monthly survey of 7,000 companies, edged up to 106.6 in November from 106.4 in October. The median forecast in a Reuters poll of 43 economists had been for a drop to 105.1..

“The German economy is still performing relatively well despite the international turmoil,” said Ifo chief Hans-Werner Sinn, ascribing the increase to “somewhat less sceptical” expectations in German trade and manufacturing.

The news pushed up the euro and European shares, providing some relief after Wednesday’s poor Bund auction when the German debt agency could not find buyers for almost half a 6 billion euro bond sale. Analysts called the auction of 10-year bonds a “disaster.

Ifo economist Klaus Abberger told Reuters the November index showed the debt crisis had not yet reached the real economy and that Germany had a good chance of avoiding recession this winter, with domestic demand looking stable.

“A slowdown will come but not a drastic one. We are not in free-fall,” Abberger said.