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Merkel Warns Of Greek 'Risk To Europe'

German Chancellor Angela Merkel (file photo)

German Chancellor Angela Merkel (file photo)

German Chancellor Angela Merkel has warned that debt-stricken Greece poses a financial risk to all members of the European Union.

Merkel made her remarks in an address to parliament in Berlin.

"If any member country of the eurozone became insolvent then it would mean serious risks for everyone in Europe, including Germany as Europe's largest economy," Merkel said.

Merkel, speaking ahead of an EU leaders summit today in Brussels, said Germany will call for International Monetary Fund (IMF) and bilateral European Union aid to be granted to Greece "only as a last resort."

The euro has fallen to its lowest level in 10 months against the U.S. dollar amid concerns over the EU's response on how to help Greece.

EU powers have been debating whether to put together an EU financial aid package for Greece, or whether Athens should seek help from the IMF.

Greek Prime Minister George Papandreou today urged fellow EU leaders to act to stabilize the euro.

Athens has ordered spending cuts and tax increases to lower the country's budget deficit, which is four times higher than the EU limit.