World News : Merkel lauds wage deals, signals backing growth moves

BERLIN (World News) - Chancellor Angela Merkel praised higher German wage deals and signaled flexibility on a financial transaction tax on Saturday, in a sign she is open to new measures to boost growth in Europe.

A day after Germany said it supported giving Spain an extra year to cut its deficit to the 3 percent of GDP threshold, Merkel sent the message she was ready to compromise with the opposition SPD and European partners in other areas.

But she once again rejected joint euro zone bonds as a solution to the crisis and said it should be possible for countries that violate fiscal rules to be sued in the European Court of Justice.

The comments, at a conference of her Christian Democrats (CDU) in Berlin, show that she is ready to heed calls for Germany to do more for growth but wants other euro states to accept giving up sovereignty over their budgets in exchange.

"You can't ask for euro bonds, but then not be prepared to take the next step towards closer integration," she said. "We won't be able to create a successful currency together this way."

In a nod to the SPD, which is threatening to delay approval of Merkel's new pact on budget discipline, she said for the first time she was open to introducing a financial transaction tax across those euro states that support one.

"We're taking a look to see if we can possibly get something done with a few countries that have the same view," Merkel said, although she added that "unfortunately" it was not possible to get a broader worldwide agreement nor even one for the European Union nor even the euro zone.

Merkel went out of her way to praise the relatively high wage deals that German workers are winning this year, pay raises that economists believe will boost domestic consumption in Europe's largest economy.

German political leaders tend to stay out of wage talks because they do not want to take sides. But this year gover nment leaders had openly called for stronger wage increases.

"A good budget policy and policies to boost demand have to be combined," she said, adding that domestic consumption in Germany should not be throttled at all.

Volkswagen, Europe's largest carmaker, said it will give workers at its German factors a 4.3 percent pay increase for a 13-month period after the IG Metall union secured a 4.3 percent raise for its 3.6 million workers.

It was the highest increase for the engineering sector since 1992.