* Under fire for threatening newspaper over home loan story
* Admits he was wrong but will not quit
* Merkel criticised over scandal (Recasts with president’s interview)
By Madeline Chambers and Annika Breidthardt
BERLIN, Jan 4 (Reuters) - German President Christian Wulff admitted on Wednesday making a “grave mistake” by trying to stop a paper publishing an embarrassing story about a home loan, but said he had no plans to resign.
The scandal that has swirled around Wulff since mid-December risks becoming a major distraction for Chancellor Angela Merkel as she tries to focus on solving the euro zone debt crisis.
Critics say it reflects badly on her judgement, as she pushed in 2010 for Wulff’s election to the ceremonial but influential post over a popular opposition candidate.
Wulff had remained silent since news broke on Monday that he had left a voicemail message last month for the editor of top-selling German daily Bild in which he threatened “war” if the paper published the article on his low interest-rate home loan.
But with pressure growing for him to step down, he arranged an interview with German public television stations ARD and ZDF on Wednesday to try to calm the storm.
“The call to the chief editor of Bild was a grave mistake, for which I am sorry and for which I apologise,” Wulff said, adding he had not done everything right, but had broken no laws.
Asked whether he had considered resigning in the past few days, Wulff said: “No, because I had great support in the past weeks from many citizens, my friends and employees.”
Earlier on Wednesday, Merkel gave her backing to the 52-year-old conservative career politician and former state premier from Lower Saxony. But given the outrage in Germany over his conduct, it is unclear how long she can stand by him and whether his apology will suffice to ease pressure on him to resign.
Deputy parliamentary leader of the opposition Social Democrats Hubertus Heil said: “This is no coup and will not end the debate.”
Were Wulff forced to step down, Merkel would face the difficult task of finding a successor and rallying her centre-right coalition behind a new candidate, a process that could take weeks and expose new cracks in her government.
Germans take the largely ceremonial office of president seriously. The incumbent should be a moral authority who defends constitutional laws, including a commitment to press freedoms.
Wulff’s trouble started last month with a report in Bild about a home loan at cheap rates that he received from the wife of a wealthy businessman friend when he was premier of the northern state of Lower Saxony.
It emerged this week that Wulff had left a furious voicemail message for Bild’s editor before the story was published, threatening legal consequences if it was printed.
“I clearly felt more like a victim at the time,” Wulff said in Wednesday’s interview. “One has a protective function and one feels helpless.”
He said the affair had been “a learning process”.
“I went from being a state premier to president very quickly, without time to adjust or prepare,” he added. “It all went very fast.”
Several conservative allies and opposition lawmakers have turned on Wulff, saying he is unworthy of the presidency. German media criticism has been scathing.
“The overwhelming majority of the population can no longer take him seriously,” Vera Lengsfeld, a member of Merkel’s Christian Democrats (CDU), told Handelsblatt Online. “No new revelations are required to be certain that Wulff must go.”
Once popular for his easy manner and mainstream views, Wulff had been seen as a future rival to Merkel.
He had managed to retain his standing in the largely Catholic CDU despite announcing he would divorce his wife of 18 years to marry a woman 14 years younger than him.
Several lawmakers have already taken aim at Merkel, who was widely seen as having opted for Wulff to eliminate a potential rival. Wulff was picked to succeed Horst Koehler, who resigned as president in 2010 after drawing criticism for saying Germany’s mission in Afghanistan served economic interests.
“Her cold power politics pushed out a respected and experienced president and replaced him with a politically and personally immature career politician,” Werner Marnette, a former CDU economy minister in Schleswig Holstein, told Handelsblatt Online.
The Sueddeutsche daily said Wulff had not become president due to his own merit, popularity or moral authority.
“Christian Wulff is president because the chancellor ... wanted him to be. If there is a rudimentary cause and effect principle, Angela Merkel must be called to account.”
“The woman who made Wulff president must tell him he cannot continue. Otherwise Wulffgate will become Merkelgate.” (Additional Reporting by Sarah Marsh; Editing by Noah Barkin and Andrew Roche)