The eurozone bailout fund will see its firepower increased to more than €1 trillion to enable it to contain the Eurozone debt turmoil, German government sources said today.

German lawmakers today backed an expansion of the size and powers of the eurozone bailout fund, in a major step toward tackling the bloc’s sovereign debt crisis.

German MPs are expected to approve new powers today for the eurozone bailout fund in a major step toward tackling the bloc’s sprawling sovereign debt crisis.

Conservatives scored victories in some of Europe’s largest economies as voters punished left-leaning parties in European parliament elections in France, Germany and other nations.

A senior German Social Democrat today said he expected his centre-left party to show “great unity” in backing conservative Angela Merkel, its one-time opponent, as chancellor in a parliamentary vote this week.

Germany’s main parties have come one step closer to building a coalition, agreeing on several points including raising the retirement age and a policy on Turkey, but they still must overcome the hurdle of plugging a huge budget shortfall.

Germany’s Social Democrats pressed for a new tax on high-income earners today as negotiators opened a decisive week in their efforts to form a new government - talks that will focus on plugging a huge budget shortfall.

A senior German conservative today pressed Chancellor Gerhard Schroeder’s party to back off swiftly from its claim to lead the country and create a “climate of trust” for coalition talks.

Aides to Chancellor Gerhard Schroeder and rival Angela Merkel showed no signs of compromise on their competing leadership claims as the pair met today for a second round of talks on forming a new German government.

Aides to Chancellor Gerhard Schroeder and rival Angela Merkel have sounded uncompromising notes on their competing leadership claims as the pair prepare for a second round of talks on forming a new German government.