“Nothing has changed in my position,” she said at a news conference with Prime Minister Mario Monti of Italy and the French president, Nicolas Sarkozy, in Strasbourg, in eastern France.

But with signs of spreading contagion — a weak bond sale on Wednesday in Germany that lifted rates there, rates on sovereign debt rising to unsustainable levels in Italy and Spain, and interbank lending in Europe beginning to dry up — questions remained about just how long Germany can resist the persistent calls for action.

The German newspaper Bild reported Thursday that the Merkel government was inching toward accepting so-called euro bonds, at least in some form, even if the public stance remained against them, and that some of her party said there could be a trade-off for treaty changes. “We aren’t saying never,” Norbert Barthle, a legislator from her coalition, told journalists. “We’re just saying no euro bonds under the current conditions.”

That could be some time. France and Germany say euro bonds will make sense only down the road, when there is more convergence and growth, and when Paris and Berlin will not be on the hook for all the other weaker economies. France, however, wants to use the European Central Bank more aggressively to backstop vulnerable euro zone economies while they reform themselves.

Mrs. Merkel and other German officials fear that giving in to the calls for collective bonds or using the European Central Bank as a lender of last resort will ease pressure on the debtor nations, allowing them to avert the drastic structural changes that Berlin says that they need to make to become competitive, while making Germany and other creditors liable for their debts.

There was no hint of any softening from Mrs. Merkel after the leaders of the three largest economies in the euro zone met Thursday to try to reassure the markets about the future of the currency, vowing to work together on German-inspired treaty changes to promote more economic discipline and convergence.

Those treaty changes, which could take years to draft, ratify and put in effect, will have little impact on the current market anxiety over the euro, which has seen the interest rates on Italian, Spanish and French bonds rise sharply over German ones, and a growing distaste among investors even for the previously rock-solid German bonds.

The three leaders finished their luncheon meeting in Strasbourg by expressing confidence that the independent central bank would do the right thing for the currency, presumably continuing to buy enough bonds to keep the interest rates on European sovereign debt from becoming unsustainable.

“We all stated our confidence in the European Central Bank and its leaders, and stated that in respect of the independence of this essential institution we must refrain from making positive or negative demands of it,” Mr. Sarkozy told the news conference.

But Mr. Sarkozy’s frustration with German intransigence was evident. “I am trying,” Mr. Sarkozy said, “to understand Germany’s red lines.”

Mr. Sarkozy, who has been pressuring Berlin to let the bank act more decisively to support Italy and Spain and halt a rush out of euro zone bonds and banks, said that joint proposals to modify European Union treaties would be presented ahead of a summit meeting on Dec. 9. The modifications, sought by Germany but supported by France, would allow the European Union greater oversight of national budgets and statistics, create debt limits for governments and try to create more convergence on policies like pension ages and tax levels.

But Mrs. Merkel made it clear that any new treaty changes would not touch the charter of the central bank.

The markets were predictably disappointed with the German position. The yield on Italian 10-year bonds, the broad cost of government borrowing, crept back above 7 percent on Thursday as European stocks fell for a sixth day. The markets were also affected by remarks from the chief economist of the Organization for Economic Cooperation and Development, Pier Carlo Padoan, who warned in an interview with the newspaper La Stampa that while a euro-zone recession could still be avoided, forthcoming forecasts showed “declining and very weak growth.”

Steven Erlanger reported from Paris, and Nicholas Kulish from Berlin.

Article source: http://www.nytimes.com/2011/11/25/world/europe/merkel-rejects-rapid-action-on-the-euro.html?partner=rss&emc=rss