* Merkel holds summit with euro zone jobless at record high
* Coincides with Portugal crisis over measures she championed
* Leaders including Portuguese PM discuss youth unemployment
By Michelle Martin and Stephen Brown
BERLIN, July 3 (Reuters) - European leaders promised on Wednesday to step up the fight against soaring youth unemployment, but offered no new solutions or money at a meeting critics derided as a “show summit” to soften Angela Merkel’s image ahead of a German election.
The chancellor, whose insistence on spending cuts in return for aid during the euro crisis has made her a target of anger in recession-hit southern Europe, hosted about 20 of her EU counterparts a week after the bloc agreed to spend 6 billion euros over the next two years to combat youth joblessness.
A few hundred people protested in front of the Chancellery in central Berlin, waving banners with slogans like “Europe’s Youth Needs More Than Merkel’s Hot Air”.
The stated aim of the meeting was to discuss how best to use European Union funds once they become available in January.
At a news conference that featured statements from more than a half dozen senior EU figures, including French President Francois Hollande, Merkel stressed the need for more efficient labour rules and better education and training opportunities.
But the leaders were short on specifics, agreeing to meet again in November to evaluate progress.
“We want to put ourselves under a bit of pressure because we know we’ve raised certain expectations with today’s conference,” Merkel said. “It is very clear that we can’t solve the problem overnight but we must make progress by the next time we meet.”
The meeting took place against the backdrop of a political crisis in Portugal, brought on by a row over the austerity policies advocated by its European partners, the European Central Bank and International Monetary Fund.
Portuguese Prime Minister Pedro Passos Coelho, who attended the meeting in Berlin, told reporters he had no plans to resign despite the departure of several top ministers in recent days.
“I believe truly that people in my country are more frightened of the possibility of having a general election than maintaining the course of our reform programme,” he said.
Portuguese unemployment is at a record 17.7 percent and 42 percent of young people are out of work. In Greece and Spain youth jobless rates are close to 60 percent and across Europe an estimated 5.6 million under-25s are unable to find work, fuelling fears of a “lost generation”.
“I don’t think we’ve ever had a challenge like this in the history of European integration,” Martin Schulz, the German president of the European Parliament, told reporters.
He warned of a “systemic failure” if a whole generation of Europeans are excluded from the workforce and society.
Rosa Donoso, a 31-year-old Spaniard looking for work in Germany, said as she protested outside the Chancellery: “I don’t trust our politicians. They’re just talking, it’s all ‘blah blah blah’.”
Sigmar Gabriel, the leader of Germany’s opposition Social Democrats (SPD), joined the demonstrators and denounced Merkel’s summit as a “farce”. “This is just electioneering,” he said.
According to the latest opinion polls, Merkel holds a lead over the SPD of more than 15 percentage points with less than three months to go before the Sept. 22 vote.
But her entourage is worried she could be blamed if the economic situation in southern Europe gets worse and social unrest breaks out. Several months ago, she began shifting her rhetoric, emphasising growth and jobs and playing down the need for more deficit reduction.
Carsten Nickel, an analyst Teneo Intelligence, said the meeting allowed Merkel to present herself as a “benevolent European leader to her domestic audience”.