BERLIN - A German government spokesman dismissed market rumors on Friday that Chancellor Angela Merkel was to resign, and the euro recovered some poise in early European trade after taking a hit in Asia overnight. The origin of the rumors was unclear and observers in Berlin were flabbergasted by the speculation. Government spokesman Christoph Steegmans said he was baffled by the talk. "Rumors about Merkel's resignation are just pulled out of thin air," Steegmans said. The rumor pushed the euro down roughly half a cent against the dollar in Asian trade. The denial stemmed further losses, and the euro traded at $1.4407 by 0900 GMT. Germany's blue-chip DAX share index also opened firmer, trading 0.58 per cent higher at 0900 GMT. "The Merkel rumors are not an issue for the stock market as they have already been denied clearly," said Heino Ruland, market analyst at Ruland Research. Squabbling within Merkel's center-right coalition on issues including tax cuts, Afghanistan and health policy have marred the start of her second term. Her support has waned but is still strong and she faces no challengers within her government. The rumors followed the publication of a Time magazine article about Merkel's domestic political problems. The market had already been unsettled by fears about the impact on the euro of the Greek budgetary crisis. Merkel was quoted as saying on Thursday the euro faced a "very difficult situation" in the next few years. Some members of her Christian Democrats (CDU) accused her this week of failing to show enough leadership. But her position within her party and in the government has been unchallenged since she was re-elected with a clear majority on September 27. She is due to meet the leaders of her coalition allies on Sunday to try to secure agreements on key policies.
