Opposition gives Merkel's president surprise backing

BERLIN (Reuters) - Chancellor Angela Merkel got unexpected support on Monday in her battle to keep her beleaguered president in office with an improbable endorsement from the leader of Germany's opposition Social Democrats (SPD).

SPD chairman Sigmar Gabriel, who may run against Merkel in the 2013 election, said he did not want Merkel ally Christian Wulff to resign over a banking scandal because it could spark a national crisis if a second head of state quit within two years.

Wulff has come under intense public and media pressure to step down after 18 months in office even though he apologised about misleading lawmakers over where he got a 500,000 euro ($650,000) private loan for a house.

"It'd be a disaster bordering on a national crisis if a second president were to resign within the span of two years," Gabriel told conservative daily Die Welt, which has reported extensively on Wulff's business dealings.

"He needs to come completely clean but that shouldn't lead to his resignation - but rather a return to carrying out his duties as president in a decent, credible manner," Gabriel said.

Gabriel's intervention may have been triggered by SPD hopes of installing its own candidate in the presidential election in 2015 when SPD chances of controlling the Federal Assembly will be higher. Wulff's exit now would mean an immediate election and a likely conservative win. The next vote would then be in 2017.

Merkel's centre-right coalition, which backed Wulff, has a slim 4-seat majority in the 1,244-member Federal Assembly that meets every five years to elect Germany's head of state. That is down from a 22-seat majority in 2010 when Wulff was elected.

Political analysts say the SPD also has no interest in seeing Merkel's coalition collapse right now because it does not want events to spin out of control now to the point of triggering new parliamentary elections.

The SPD trails Merkel's conservatives in opinion polls and believes it would have a better chance of winning back the chancellery in 2013, analysts say.

On Thursday Wulff apologised in person for the first time for a scandal over his private finances and links to wealthy businessmen, but said he intended to stay on as head of state despite having "irritated" his countrymen.

After 10 days of revelations about the home loan from business friends when he was premier of Lower Saxony, which was swapped for a bank loan at cheap rates not available to the public, Wulff spoke out in public for the first time.

"I have realised how irritating the private financing of our family home appeared to the public. I could have and should have avoided this," Wulff said.

Wulff's financial dealings risk undermining Merkel's credibility. She chose him for the post in 2010 when her last hand-picked president had to step down. Shortly before the speech, Wulff's press spokesman was fired without explanation.

"I should have told the state parliament of Lower Saxony about the private loan at the time. That was not straight of me and I am sorry. I concede that not everything that is legally correct is right," Wulff said.

In a country with little tolerance for financial wrongdoings by elected officials, the scandal has given Merkel a headache at the end of a tough year.

Wulff, who was premier of Lower Saxony from 2003-2010, replaced Horst Koehler, a former head of the International Monetary Fund. He resigned unexpectedly in 2010 after making undiplomatic comments about overseas military missions.

The most concrete accusation against Wulff is that he told the state assembly in 2010 that he had no business ties with businessman Egon Gerkeens. But it emerged that Gerkeens' wife had lent Wulff money whereupon Wulff made his apology.

(Editing by Louise Ireland)