Merkel: Euro in tough position but will survive

The euro is in a difficult position for the first time but will weather the storm, German Chancellor Angela Merkel said in a newspaper interview published on Wednesday.

It was dangerous that some countries were being speculated against, she said, adding that debt-ridden euro zone members such as Greece had to tackle their own problems.

"For the first time since it was introduced, the euro is now in a difficult situation but it will stand its ground," Merkel told the Frankfurter Allgemeine Zeitung in an interview.

"I think real confidence in the euro can only be achieved on the financial markets if the problem is attacked at the roots in Greece and other states with very high deficits," she said.

Greece's debt crisis has shaken the euro and sent peripheral bond and credit default swaps markets reeling.

European leaders have offered verbal support to Greece but agreed no concrete steps. Germany, Europe's biggest economy and traditionally a rock of stability in the euro zone, is a crucial player.

Merkel has been reluctant to offer aid to Athens, well aware that public opinion and her Free Democrat (FDP) coalition partners are hostile to anything that would look as if German taxpayers were bailing out Greece.

In the interview, Merkel welcomed moves by Athens to consolidate its public finances and said it was important that Greece achieve its goals.

She said the basis for national economic policy was the European Union's Stability and Growth Pact as there was no political union underpinning the euro.

"In this pact, we have a sustainable instrument that guarantees a coordination of budget policy for the stability of the euro," said Merkel, adding that Germany would vigorously pursue the goal of having a stable euro.

"It would be wrong to have a coordinated economic policy for the euro group while the others can do what they want, because we are of course closely linked to our other neighbours through trade," she said.