UPDATE 3-German parliament approves euro aid package

* German contribution seen at around 148 billion euros

* Merkel under fire domestically over euro zone policy

(Adds Merkel quote)

By Madeline Chambers

BERLIN, May 21 (Reuters) - Germany's parliament approved a law on Friday allowing Europe's biggest economy to contribute to a 750 billion euro ($940 billion) emergency debt package despite broad public opposition to the move.

A clear majority of lawmakers in the lower house backed the bill. But, in a sign of domestic pressure piling on Chancellor Angela Merkel, 10 members of her own centre-right coalition either voted against it or abstained.

The bill will allow Germany to contribute some 148 billion euros in guarantees to the international package.

Under fire at home for her leadership style in the euro zone debt crisis and from European Union partners over Germany's solo move against speculators this week, Merkel welcomed the vote.

"The governing parties gave a clear message to Europe, for Europe and a clear signal towards a culture of more stability in the euro zone," Merkel told a news conference with British Prime Minister David Cameron [ID:nLDE64K1FW].

The upper house also passed the bill, leaving President Horst Koehler to sign it into law. In the lower house, 319 lawmakers voted for the bill, 195 abstained and 73 voted against -- mostly members of the socialist Left party.

The opposition Social Democrats (SPD) and Greens abstained as they wanted a firmer commitment on a financial transaction tax to force the financial sector to bear more of the burden.

In a move at least partly designed to assuage hostile public opinion about bailouts for weaker euro zone states, Germany shook markets this week by banning some speculative trades or naked short sales -- irking EU peers, who were not consulted.

MERKEL UNDER ATTACK

SPD leader Sigmar Gabriel accused Merkel of losing all credibility. "You have no direction, you have no goal," he told Merkel, adding her tactics had lost the confidence of Europe.

To add to Merkel's woes, a survey for ZDF television showed 51 percent of Germans polled opposed the euro zone aid package and 54 percent said Merkel was giving too little leadership.

Faced with such stiff public opposition, Merkel and her Finance Minister Wolfgang Schaeuble argue the unpopular package is essential to protect the euro which has fallen roughly 5.5 percent against the dollar this month.

"We're doing this in our best national interests ... the common European currency has been a huge benefit to Germany," Schaeuble said in an impassioned speech before the vote, arguing almost two thirds of exports go to members of the euro zone.

"Without the euro, we would have a much weaker economy, a much weaker Germany," he said, adding Germany is still pushing for tougher rules on euro zone deficits.

Germans resent forking out for weaker eurozone members. They fear a bulging deficit of their own and do not want to help states that have been less rigorous in budget discipline.

Voters in the state of North Rhine-Westphalia punished Merkel's centre-right coalition in a regional vote earlier this month that was overshadowed by a row over the debt crisis.

And in a stinging attack, Horst Seehofer, head of Bavaria's conservatives who share power with Merkel, told the Sueddeutsche Zeitung daily: "Sometimes I have to stop myself from tearing my hair out."

He complained of a lack of clarity over the government's plans on a financial transaction tax, adding: "The public feels mocked."

The overall aid package includes 440 billion euros in guarantees from euro states plus 60 billion euros in a European instrument and 250 billion euros from the IMF. It is on top of a 22.4 billion euro contribution from Germany to an international rescue plan for debt-ridden Greece, approved just two weeks ago. (Additional reporting by Paul Carrel and Christopher Lawton; Editing by Charles Dick)