"Rumours about Merkel's resignation are just pulled out of thin air," Steegmans said. The rumour pushed the euro down roughly half a cent against the dollar in Asian trade. The denial stemmed further losses, and the euro traded at $1.4407 by 0900 GMT.
Germany's blue-chip DAX share index also opened firmer, trading 0.58 percent higher at 0900 GMT. "The Merkel rumours are not an issue for the stock market as they have already been denied clearly," said Heino Ruland, market analyst at Ruland Research.
Squabbling within Merkel's centre-right coalition on issues including tax cuts, Afghanistan and health policy have marred the start of her second term. Her support has waned but is still strong and she faces no challengers within her government. The rumours followed the publication of a Time magazine article about Merkel's domestic political problems. The market had already been unsettled by fears about the impact on the euro of the Greek budgetary crisis.
But her position within her party and in the government has been unchallenged since she was re-elected with a clear majority on September 27. She is due to meet the leaders of her coalition allies on Sunday to try to secure agreements on key policies.
A poll last week by ARD television showed support for Merkel had fallen by 11 percentage points from December to 59 percent, her lowest personal approval ratings since the end of 2006.