German Chancellor Angela Merkel hardened her opposition to joint debt sharing in the euro region as President Barack Obama singled out Europe’s leaders for not doing enough to arrest the financial crisis.

With Europe’s debt crisis cited last week for canceled IPOs, weaker-than-expected Chinese manufacturing figures and a rise in the US jobless rate, Merkel rejected joint debt issuance in the 17-nation euro area as a solution, saying “under no circumstances” would she agree to Germany-backed euro bonds.

Now, some “come along and ask for euro bonds, saying all we need are equal interest rates and everything will turn out all right,” Merkel said in a speech to members of her Christian Democratic Union in Berlin Saturday. Instead, what’s needed is an economic overhaul to tackle the lack of competitiveness in Europe, she said.

Merkel, the head of Europe’s biggest economy and the largest contributor to bailouts for Greece, Portugal and Ireland, is the pivotal player in efforts to resolve the crisis now in its third year. As Spain struggles to avoid becoming the next country to call for a rescue and the euro slides near a two-year low against the dollar, Obama added to pressure on Merkel from the European Central Bank, France and Italy to do more to halt the spread of contagion.

Obama, speaking at a Chicago fundraiser on June 1 as he bids for re-election in November, said that a report showing the slowest month of US employment growth in a year was in large part “attributable to Europe and the cloud that’s coming over from the Atlantic.” The “whole world economy has been weakened by it,” he said.

“Europe is having a significant crisis in part because they haven’t taken as many of the decisive steps as were needed to deal with the challenge,” he said at a separate event in Minneapolis.

The president’s point person for the European crisis, Lael Brainard, Treasury undersecretary for international affairs, ended a three-day tour of Europe’s crisis capitals the same day as work continued on erecting a financial firewall to stem contagion. The European Union is targeting July 9 as the start date for its permanent rescue fund, the 500 billion-euro ($620 billion) European Stability Mechanism, an EU official said.

Brainard held closed-door meetings with government officials in Athens, Madrid, Paris, Frankfurt and Berlin in a week when investors flocked to the perceived safety of German and US bonds. The euro fell against the dollar and dropped to an 11-year low against the yen as uncertainty over the outcome of Greek elections on June 17 shifted to take in Spain, where Prime Minister Mariano Rajoy’s government is struggling to shore up banks amid a recession.

Merkel and Finance Minister Wolfgang Schaeuble are urging Rajoy to take an international bailout since Spain cannot solve its banking woes alone, German news magazine Der Spiegel reported Saturday in an advance copy of an article in this week’s edition, without citing a source for the information. Steffen Seibert, Merkel’s chief spokesman, declined to comment on the report when contacted by telephone.

A Spanish government spokeswoman declined to comment on the report, refering instead to a speech Rajoy made Saturday in which he said the euro region should have a centralized mechanism that can directly recapitalize lenders as part of a banking union, echoing a proposal by European Commission President Jose Barroso. Such a structure, which might include conditions for banks receiving aid, would help meet Spain’s need for external capital without the stigma of a formal rescue.

Spain “will emerge from the storm under its own efforts and with the support of our European partners,” Rajoy said in the speech in Sitges, near Barcelona, calling on analysts and investors to moderate “irrational” views of Spain’s financial situation. “We are not on the edge of a precipice.”

Spanish 10-year yields ended the week at 6.51 percent, approaching the 7 percent level that triggered previous euro- area bailouts, though below a euro-era record of 6.78 percent on Nov. 17. Germany’s equivalent 10-year bund rate was at 1.17 percent after reaching 1.127 percent, the lowest since Bloomberg began collecting the data in 1989. German two-year yields slid below zero for the first time.

Irish backing for Europe’s fiscal pact failed to halt a decline in European stocks for the fourth week in five, with the Stoxx Europe 600 Index dropping 3.1 percent to 235.09. The benchmark measure has plunged 14 percent from this year’s high on March 16. The euro closed at $1.2434 in Brussels on June 1.

Merkel lauded Rajoy’s efforts “for the first time to undertake sweeping labor market reforms,” tackle the real- estate crisis and address Spanish banks, where she said the situation is “fragile.”

“That’s why it’s important to create transparency quickly over what that means for the banks, what the situation is for recapitalization,” she said. Germany and Spain are in close contact over those efforts “as we must tackle the problems of the past and start the future with a clean slate.”

The German chancellor, who was besieged over her crisis- fighting policy last week by Italian Prime Minister Mario Monti and ECB President Mario Draghi, took aim at Italy as she cited a “missed opportunity” offered by the euro’s introduction for Europe to overhaul uncompetitive economies. The cheaper borrowing that came with the euro meant “countries like Italy became virtually on a par with Germany in terms of interest rates,” she said.

Now “what we have is a situation that we didn’t want,” Merkel said. “The freedom created by this situation wasn’t exploited to improve long-term competitiveness. Instead, the time was used to spend too much money in consumption and too little time in tackling reforms.”

In Greece, where the crisis first emerged in late 2009, Alexis Tsipras, head of the biggest anti-bailout party, Syriza, appealed to voters two days ago to give him the power to cancel the terms of the country’s international bailout, including economic reforms. Moody’s Investors Service lowered Greece’s highest possible credit rating the same day, saying there was an increasing risk Greece may exit the euro region.

Greece is reaching an endgame regardless of the election outcome, Germany’s best-selling Bild newspaper said, underscoring the domestic pressure facing Merkel over her crisis response.

Greece “is unravelling,” and ever-more aid cannot deliver the new beginning that Greece needs, Nikolaus Blome, Bild’s chief political columnist, said in an editorial in Saturday’s edition.

The Greek state “must be rebuilt, like in a developing nation,” Blome said. “Someone among the euro-zone leaders must finally tell the Greeks the truth: this fresh start can only be achieved with a radical first step. And that means leaving the euro.”

Billionaire investor George Soros said in speech in Trento, Italy, Saturday that European leaders, chief among them Merkel, have a three-month window in which to “correct their mistakes and reverse the current trends.”

“We need to do whatever we can to convince Germany to show leadership and preserve the European Union as the fantastic object that it used to be,” Soros said. “The future of Europe depends on it.” [Bloomberg]