UPDATE 1-Merkel says ready to help E.Europe via IMF

Thu Feb 19, 2009 1:26pm EST

(Recasts, adds quotes, background)

BERLIN Feb 19 (Reuters) - Chancellor Angela Merkel said on Thursday Germany stood ready to help eastern European countries in financial difficulty, primarily via the IMF, but declined to speculate about coming to the aid of fellow euro-zone countries.

"If help is needed we are ready, particularly through the IMF," Merkel said when asked about the financial troubles of some eastern European countries.

"Germany will not refuse to (financially) support the IMF if necessary. But we should avoid talking down countries that are not encountering difficulties because there are lots of rumours circulating that can breed weakness," she told a news conference with European Commission President Jose Manuel Barroso.

The currencies of countries like Poland, the Czech Republic and Hungary have come under severe pressure, causing firms to fail and hitting millions across the region who have borrowed in foreign currencies like the euro.

On Thursday, evidence mounted that eastern European nations were having trouble finding sources of financing. The Romanian central bank said this week it might seek help from the International Monetary Fund as Hungary and Latvia did last year.

Barroso said the Commission was "contemplating all scenarios" and had 15 billion euros available after providing a total of 9.6 billion euros to Hungary and Latvia.

"At this stage we have not had other requests," Barroso said.

Merkel declined to be drawn on whether Germany was prepared to step in to help other euro-zone countries who might encounter acute financial problems.

Finance Minister Peer Steinbrueck said on Monday that although EU rules said countries should not help each other within the euro zone, all members of the bloc would have to help "if it came to a serious situation".

Asked by Reuters about the remarks, Merkel said: "I will not participate in any speculation. The euro zone is strong and has proven itself."

The euro trimmed gains against the dollar on the remarks.

Barroso said the euro area was in "much better shape" than countries outside the currency bloc.

"So we can be ready for any difficulties in the future. I believe we have the instruments in the European Union to face these kinds of difficulties if they arise." (Reporting by Noah Barkin; editing by Robert Woodward)

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