UPDATE 1-EU, Germany deny report euro rescue fund inadequate

The European Commission and German government denied on Thursday a news report that Brussels was considering doubling the size of a rescue fund to support the euro, with Berlin saying the fund was adequately financed.

An unsourced report in German daily Die Welt said that the European Union's executive body had proposed doubling the size of the European Financial Stability Facility (EFSF).

"This is absolutely false," said a European Commission spokesman.

Established after the bailout of Greece in May to defend the euro from further crises, the EFSF is designed to help a euro zone country by issuing bonds backed by up to 440 billion euros ($585.9 billion) worth of guarantees from euro zone governments.

"We think the question does not arise because only one country so far has applied for assistance from the EFSF and it is not an amount that makes us worry that there would not be capacity," said a German finance ministry spokesman.

German Bundesbank chief Axel Weber, a powerful member of the European Central Bank's governing council, said in Paris one day earlier the EFSF and other EU rescue funds had enough money, if needed, to cover the borrowing needs of stretched euro zone members Greece, Ireland, Portugal and Spain. [ID:nLDE6AN28M]

Together with separate EU and International Monetary Fund backing, the funds totalling 750 billion euros "should be more than enough to see off an attack on the euro zone", he said.

Currency and credit markets have been unnerved by German proposals to force bond holders to share the cost of any future default by highly indebted euro zone countries, as well as by the alarmist tone of recent comments by Chancellor Angela Merkel and European Council President Herman Van Rompuy.

Die Welt said unnamed experts were concerned that Spain could need a financial bailout in future, and that the existing fund might therefore not be big enough to cover this.

Ireland is so far the only country to apply to the EFSF for help coping with the impact of a banking crisis on its public finances. Just before the creation of the EFSF, Greece received a three-year, 110 billion-euro bailout from the EU and IMF. (Additional reporting by Andreas Rinke, Dave Graham and Jan Strupczewski in Brussels; Editing by Maria Golovnina)