German MPs rebel in euro zone rescue package vote

Twenty-five politicians from Germany's ruling coalition refused to back a draft law that would boost the powers of the euro zone's rescue mechanism in votes, underscoring the risk that Chancellor Angela Merkel might fail to drive through the measure.

The prospect of a stalemate on the issue in Germany threatens to worsen the existing concerns of investors about the potential for the eurozone's debt laden countries to create a new banking crisis.

Shares were expected by many to fall again today after sharp declines yesterday.

In a vote taken by members of Merkel's conservative bloc of Christian Democratic Union (CDU) and Christian Social Union (CSU), 12 members of parliament voted against introducing the law into parliament and seven others abstained, party sources said.

In a separate vote by lawmakers from the Free Democrats (FDP), two voted against the measure to boost the European Financial Stability Facility (EFSF) and four abstained.

Germany's Bundestag lower house of parliament is due to vote on new powers for the EFSF on September 29. Although a majority in the broader house is a foregone conclusion due to opposition support for the legislation, Merkel would face pressure to dissolve parliament and call new elections if she was unable to secure a majority with conservative allies alone.

Her coalition has 330 seats in the 620-seat Bundestag, meaning she can afford 19 dissident votes.