The chancellor's comments on Wednesday in Jeddah, Saudi Arabia, came after days of turmoil on world markets and a falling euro have raised anxieties that Europe's debt woes could derail the global economic recovery.

Merkel told a conference of businessmen from the Gulf Cooperation Council (GCC) that Germany had benefited enormously from the European common currency and that it would use all its clout to back a strong euro.

The German chancellor is on a four-day trip through the Persian Gulf region, accompanied by a large business delegation of more than 200 German executives.

Merkel told the gathering in Jeddah that she wanted to make a very clear statement.

"Germany as the largest exporting nation, the largest economy in the European Union, has strongly benefited from the euro in the past. Therefore, we will work with all our strength for a strong euro," she said.

But, the chancellor, taking a dig at recent criticism of Germany, made a point of adding that, to shore up the common currency and to boost European competitiveness, the euro countries had to be aligned with the region's fittest economies and not its weakest.

"This is the goal Germany is pursuing, If we do not achieve this goal, we will not be competitive in the world," she said.

Merkel also expressed her commitment to conclude a trade pact with the GCC. Negotiations have been stalled over Europe's desire to include human rights issues in the agreement. Merkel said she would work to clear up barriers to bilateral investment and trade, which is strongly in Germany's favor.

gb/dpa/AP/AFP

Editor: Susan Houlton