UPDATE 3-Merkel partner in disarray after shock resignation
* FDP rising star quits as party slump worsens
* Lindner resignation may be prelude to battle for leadership
* More woes for Merkel with President Wulff in hot water
BERLIN, Dec 14 (Reuters) - A leading figure in Germany's Free Democrats resigned unexpectedly on Wednesday amid a brewing battle for control of the beleaguered party that shares power with Chancellor Angela Merkel's conservatives.
Christian Lindner, general secretary of the FDP and long seen as the liberal party's rising star, quit in a dramatic move that exacerbated the party's leadership crisis and appeared to be linked to a divisive referendum of party members on euro zone rescue moves.
Coalition sources said Lindner wanted to distance himself from besieged FDP chairman Philipp Roesler by lobbing a farewell grenade at his boss, who is under attack for persistent weakness in opinion polls and poor management of the referendum.
Turmoil in the FDP could cause instability for Merkel's coalition even though the next election is not due until 2013. Speculation is growing that the FDP will dump Roesler and turn to veteran parliamentary floor leader Rainer Bruederle, 66.
Lindner, 32, and Roesler, 38, made brief statements on Wednesday to journalists in Berlin and did not take any questions. There have been rumours of behind-the-scenes tensions between the FDP's two youthful leaders.
Merkel faced further turbulence from a growing scandal engulfing President Christian Wulff, an ally she nominated for the largely ceremonial post last year. Wulff has denied accusations he misled a regional parliament over a private loan.
Merkel's spokesman said she had full confidence in Wulff and has no reason to doubt his comments about a private 500,000-euro loan for his house. Bild newspaper reported Wulff obtained the loan from a businessman friend at favourable interest rates.
Wulff told the regional parliament last year when he was state premier he had no business dealings with the friend. Bild said the businessman's wife had lent him the 500,000 euros. German editorials attacked Wulff for being less than forthright.
"Merkel has full confidence in the person and conduct of Mr. Wulff," said spokesman Steffen Seibert. "He's a good president."
'BAMBI' LINDNER LOST HIS NERVE
The Lindner resignation exposed deep splits in the party over whether to support Merkel's efforts to bolster weak euro zone members. If they widen, it could destabilise her coalition.
"He lost his nerve," a senior FDP official told Reuters when asked about Lindner's move.
But a former senior leader in the conservative party said Lindner was attacking Roesler while saving his own skin.
"Roesler's in over his head and Lindner wanted to get out before it was too late," he said. "The whole country is fed up with these too-smooth, lightweight amateurs who have run the FDP into the ground. They need someone with experience."
Lindner had responsibility for organising the referendum which was forced upon the party leadership by a group of eurosceptics within the FDP. Lindner was given the unflattering nickname "Bambi" by a FDP leader years ago and it stuck to the photogenic young man with the baby face.
His departure is the latest setback for the FDP, a pro-business party whose support has fallen to just 3 percent in opinion polls after it won a record 14.6 percent in the 2009 election, helping Merkel secure a second term.
"It's possible that Lindner wanted to abandon ship before it was too late," said Gero Neugebauer, political scientist at Berlin's Free University. "In any event it will exacerbate the FDP's crisis. The FDP has lost touch with its grass roots."
The normally loquacious Lindner made a short, terse statement to journalists at FDP headquarters in Berlin, but then left without taking questions, saying only "Auf Wiedersehen".
"There comes a time when you have to make room to allow for a new dynamic," said Lindner, a polished speaker who previously worked in the advertising industry. "The events in recent weeks and days have strengthened my belief that this is the case."
Angry that the FDP leadership was backing Merkel's euro rescue moves, eurosceptics led by lawmaker Frank Schaeffler led a campaign in recent months to collect signatures within the party for the referendum, which is non-binding.
Their idea was send a signal to the leadership by showing them that grass-roots FDP members opposed euro rescue moves.
The referendum, whose results are expected to be published on Friday, may not pass because Roesler said the required quorum of FDP members is not expected to be reached. Of the 64,000 members of the party, 21,000 needed to take part for it to be valid.
Roesler said in an interview on Sunday the quorum would not be reached and said that was a victory for him. After that thousands of FDP members cast their ballots, FDP officials said.
Lindner married a newspaper reporter in August. He also obtained a license to drive racing cars two years ago.
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