Merkel: state vote setback won't alter Europe policy

BERLIN May 14 (Reuters) - Chancellor Angela Merkel said on Monday her party's defeat in an election in Germany's most populous state this weekend was a bitter setback but would not alter her view that fiscal rigour was the only way for Europe to achieve sustainable growth.

Calling the historic setback in North Rhine-Westphalia's state election on Sunday "bitter", Merkel added: "It does not affect the work we have to do in Europe."

"There is no contradiction between solid budget policy and growth," said Merkel, who is resisting pressure in Europe for more expansive policies to foment growth and jobs instead of the painful reforms required of euro zone states receiving bailouts.