Germany's Angela Merkel soothes financial market fears over Greek default

German Chancellor Angela Merkel sought to quash talk that cash-strapped Greece might have to default soon or even leave the euro zone, rebuking her junior coalition partner for fuelling market speculation about Greece's fate.

Ms Merkel's comments helped to calm jittery markets, and contributed to a sharp rebound in French banking stocks, which have been hammered recently by fears of a chaotic Greek default that could inflict painful losses on banks elsewhere in Europe.

The chancellor stressed that Germany remains committed to financing Greece through the euro zone's bailout funds until Greece can repair its own finances through austerity measures.

She gave a thinly veiled rebuke to German politicians -- including her own economics minister and deputy chancellor, Philipp Roesler -- who have suggested in recent days that Greece should be allowed to go bust.

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