Surprise cash demand stalls Opel talks

The German government now hopes to secure a deal by Friday, economy minister Karl-Theodor zu Guttenberg told journalists in Berlin.

Detroit-based General Motors – likely to file for Chapter 11 bankruptcy in the US if it does not meet a US administration-imposed restructuring deadline of 1 June – said the additional cash was needed in order to keep Opel operating.

But Mr Steinbrueck said the federal government was not willing to provide the extra cash, adding the exact purpose of German state aid had to be transparent. "This wasn't the case," he said.

The German government entered the late-night discussions with US and GM officials, looking to set up a trust into which Opel could be placed. The trust would then receive €1.5 billion in German government loans.

Canadian company Magna has suggested it may stump up the additional money as it vies with Italian company Fiat to takeover Opel. Other buyout contenders appear to have fallen out of the race.

European concerns

As Germany's chancellor Angela Merkel struggles in an election year to save the 25,000 jobs provided by Opel, other EU member states are becoming increasingly concerned that German alone may determine the fate of GM's European operations.

GM also owns Vauxhall in the UK and Saab in Sweden, with a large Opel plant situated in the northern Belgian region of Flanders.

Belgian Prime Minister Herman Van Rompuy and the premier of Flanders Kris Peeters sent letters to Ms Merkel and commission president Jose Manuel Barroso earlier this week, calling for a European solution to a European problem.

"We are now faced with the involvement on the European side of only the German government in this decision-making process," Van Rompuy and Peeters said in their letter to Chancellor Merkel, reports AFP.

"Given the spread of the Opel, GM Europe and Vauxhall plants over several European countries we prefer a more global European participation in this process," they added.

In their letter to Mr Barroso the two politicians call for: "a new initiative by the European Commission in order to involve the governments of the other countries with GM sites in the discussions on the plans."

In response, the European Commission announced on Wednesday it would convene a meeting of European economy ministers to discuss matters surrounding the sale of Opel.

The commission's industry spokesman the commission's industry spokesman, Ton Van Lierop, said the meeting would be held at the "shortest notice" but was unable to specify exactly when.