German finance minister Wolfgang Schaeuble signalled readiness to support Portugal if it faces difficulty in funding itself in financial markets, although he said it is not in a state of emergency, it was reported today.

Mr Schaeuble suggested in an interview with Japan's Nikkei business daily that Germany would be amenable to further aid for debt-laden euro zone members provided they agreed to structural reforms such as cutting public pensions.

Portugal is so far managing to fund itself but the cost of borrowing is now close to or at record highs and is becoming increasingly punitive.

The EU has discussed a rescue plan for Portugal but it is dependent on Lisbon asking for the aid and making the request to both the EU and the International Monetary Fund. Portugal remains adamantly opposed to asking for assistance.

Mr Schaeuble told the Nikkei that Germany has pledged to demonstrate a sense of solidarity and it must prevent problems from spreading to Spain.

Monitoring and limiting excessive capital flows will be high on the agenda at a meeting this weekend of Group of 20 finance minsters in Paris.

Germany and G20 chair France plan to push for tougher regulations, Mr Schaeuble said.

Blaming excess liquidity for the global financial crisis triggered by the collapse of US investment bank Lehman Brothers, he stressed the importance of reducing it without harming growth. The United States is in agreement on getting a better grasp of capital movements, he said.

Reuters