Citing non-German government figures at the Brussels meeting, daily The Guardian said Merkel made the comments following a dispute with Greek Prime Minister George Papandreou, who it said had accused her of making "undemocratic" proposals. "If this is the sort of club the euro is becoming, perhaps Germany should leave," it quoted Merkel as saying.

Merkel's spokesman Steffen Seibert said the report was untrue and that the chancellor had not made the remarks.

"There is nothing true about this story. The chancellor never made such a statement," he said.

Berlin upset some European allies by insisting private creditors should share the pain of future state bailouts once a new permanent rescue mechanism for the single currency replaces the present temporary safety net from mid-2013.

Germany's tough line prompted a sell-off in debt from the likes of Ireland and Portugal, though finance ministers from the nations behind the euro agreed last weekend that some form of private sector liability must be included in the new mechanism.

Despite speculation that Germany might be better off without some of the weaker euro nations, Merkel's government has repeatedly stressed its commitment to the single currency.