Merkel says Europe needs better policy coordination

Europe must improve political coordination in order to provide more stability for the euro currency, German Chancellor Angela Merkel said on Wednesday.

Merkel was speaking after the European Union's top economic official, Olli Rehn, called for a stronger safety net for the euro, and Portugal, seen as the next candidate for a bailout, passed a key market test on its first debt auction of 2011.

"Political coordination must be better continued and coordinated," Merkel told a news conference with Italy's Silvio Berlusconi, adding that sustainable growth and competitiveness were the best way to keep the euro currency stable.

Asked about proposals to expand the EU/IMF bailout fund for heavily-indebted euro zone countries, Merkel said the current fund was sufficient, but that Germany would be ready to do what was needed to support the currency.

"The volume is far from being exhausted with just one country, Ireland, tapping the fund," she said. "But at the same time we would add that we are committed to the euro, just as we have been since the crisis in Greece."

"We will do what is necessary — everything else will be discussed step by step," she added.

Portugal drew strong demand for its 10-year bonds earlier in the day, and the borrowing cost actually fell slightly after European Central Bank buying of its bonds.