UPDATE 1-German parliament to vote on ESM late June

BERLIN, June 14 (Reuters) - Germany's parliament will vote on Europe's permanent rescue mechanism and fiscal pact on June 29, Chancellor Angela Merkel's Christian Democrats (CDU) said on Thursday, in time for the European Stability Mechanism to come into force two days later.

Agreement on a date for the vote followed weeks of wrangling as the main opposition parties pushed hard for more government commitment to a European financial transaction tax and measures to boost growth and jobs as conditions for lending their votes.

"The time-frame agreed now ensures the European Stability Mechanism (ESM) can come into force on time, together with the fiscal compact," CDU parliamentary floor leader Volker Kauder said after a meeting between party chiefs and leading MPs.

It would be a major embarrassment for Merkel if Germany did not approve the fiscal compact - which she championed and has been signed by 25 countries - or the ESM, which Germany wants to use to help recapitalise Spanish banks, by the July deadline.

The ESM, which succeeds the more restrictive temporary European Financial Stability Facility (EFSF), will enter into force once countries representing 90 percent of voting rights have ratified it, so it cannot start without German approval.

Merkel needs the support of the main opposition to get the two-thirds majority in the Bundestag (lower house) and Bundesrat (upper house) needed for this vote. Social Democrats have said they will approve it but more needs to be done on their demands for more pro-growth measures first.

Merkel will meet with party leaders again on June 21 and June 23 to seek a compromise with the opposition.

The voting schedule would involve the lower house voting on the ESM and fiscal compact on June 29 at 5 p.m. (1500 GMT), after a European Union summit on June 28 and 29.

The upper house, made up of representatives of the German state, could vote on it later the same day.

Reiner Haseloff, CDU premier of the state of Saxony-Anhalt said the upper house could vote in favour of the two plans, but needs support from the federal government on reaching debt targets.

He reiterated a call for a German debt redemption fund as a way of cutting the debts of German states in line with fiscal compact requirements.

Germany has had a commitment to reduce new debt anchored in its constitution since 2009 and the European version is modelled on that law.

However, under the German version of the law, states have until 2020 to get their finances in order. The new European rule has target dates for Germany's combined federal and state budgets which kick in four years earlier and, for some aspects, as soon as next year.