She said at an industrial conference in Berlin on Tuesday that Europe needs to consider how it can regain the world's confidence.

"There is a lack of confidence on financial markets that some eurozone states can pay back their debts in the long term. The world wonders how competitive eurozone countries are," said Merkel. "We in Europe need to ask ourselves how we can regain lost trust. Too often, promises have been made in Europe, which in the end were not kept.''

As she spoke, there were new signs of economic turmoil in the 17-nation eurozone.

The Standard & Poor's financial ratings service predicted the bloc's economy would contract eight-tenths of one percent this year, slightly worse than it projected two months ago.

Short-term borrowing costs for debt-ridden Spain surged amid concerns that Madrid might be forced to secure an international bailout, just as Greece, Ireland and Portugal already have.

And in Greece, unions representing government workers, teachers, lawyers and other professions called for a national strike Wednesday to protest the government's latest austerity budget measures.

Some European leaders have called for tighter banking control throughout the eurozone as one way to gain control over the continent's finances. Merkel said she supports stronger banking supervision and recapitalization of troubled banks, but only if she has the right to intervene when there are problems.

"One cannot talk about the direct recapitalization of banks in other countries without requisite intervention possibilities. That means step-by-step [reforms] and in the right order and not rushed," said Merkel.'