Market confidence in the 17-nation currency area suffered another blow when Italy had to pay the highest yield since it joined the euro in 1999 to sell 5-year bonds. And the chief executive of carmaker Fiat warned that the euro system "could go off the rails" if EU leaders do not get a grip.
Merkel said in radio interview that Europe was doing everything in its power to avoid a Greek default and urged politicians in her own coalition to weigh their words carefully to avoid creating turmoil on financial markets.
Asked by RBB inforadio whether a Greek default would doom the euro, she answered: "We are using all the tools we have to prevent this. We need to avoid all disorderly processes with regards to the euro."