UPDATE 1-German govt dismisses market rumour Merkel to quit

Fri Jan 15, 2010 1:48am EST

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BERLIN Jan 15 (Reuters) - A German government spokesman denied market rumours on Friday that German Chancellor Angela Merkel was to resign.

"Rumours about Merkel's resignation are just pulled out of thin air," government spokesman Christoph Steegmans said when asked about the rumours, which had hit the euro on Asian markets.

It was unclear where the rumours originated and Steegmans said he was baffled by them.

The rumours followed the publication of a Time magazine article about Merkel's domestic political problems. The market had already been unsettled by fears about the impact on the euro of the Greek budgetary crisis.

Persistent squabbling within Merkel's centre-right coalition on issues including tax cuts, Afghanistan and health policy have marred the start of her second term.

Some members of her own Christian Democrats (CDU) accused her this week of failing to show enough leadership [ID:nLDE60807Q].

But her position within her party and in the government has been unchallenged since she was re-elected with a clear majority on Sept. 27.

She is widely credited with steering Europe's biggest economy through the global financial crisis.

A poll last week by ARD television showed support for Merkel had fallen by 11 percentage points from December to 59 percent, her lowest personal approval ratings since the end of 2006.

(Reporting by Angelika Stricker; Writing by Madeline Chambers)

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