Germany's likely next chancellor Friedrich Merz is in a race against time to secure support for a massive increase in state borrowing but optimistic comments by party negotiators after emergency talks pushed the euro on Tuesday to a five-month-high.

A senior ally of Germany's likely next chancellor Friedrich Merz on Tuesday was optimistic about securing support for a massive increase in state borrowing this month, seeing the basis for a deal on defence with the Greens party after emergency talks.

Germany’s Greens are ready to negotiate and are hoping for an agreement by the end of this week in a dispute over defense spending with the country’s prospective next ruling coalition led by Chancellor-in-waiting Friedrich Merz.

BERLIN - Germany's Greens vowed to block plans by likely next chancellor Friedrich Merz for a massive increase in state borrowing but left room for compromise on Monday on measures to revamp the military and revive growth in Europe's biggest economy.