ECB's Weber says rescue fund idea counterproductive

FRANKFURT (Reuters) - A European monetary fund that could be tapped to help financially troubled countries is a counterproductive idea that goes against the European Union's no bailout rules, Bundesbank President and ECB member, Axel Weber said on Tuesday.

"Any discussion about bailouts is completely counterproductive, Greece has to concentrate on implementing its budget reform plans," Weber said, adding that discussions on the topic remained diverse.

"The no-bailout clause is a central part of the European Union framework."

"It's not helpful to talk about ways to institutionalise help when the question is how to implement the budget reforms."

Weber's concerns add to strong criticism of the idea by ECB Executive Board member Juergen Stark on Monday.

However, German leader Angela Merkel has given her theoretical backing for the plans suggesting that Europe's political and monetary powers are divided on the issue.

Weber, who was speaking at a news conference on the Bundesbank's latest accounts, added that he expected the German economy, the euro zone's largest, to power forward for the rest of the year after being slowed by the icy start to the year.

"There are a lot of signs that after a subdued start to the year, the economy will grow strongly for the rest of the year," he said.

With pickup in global growth "the German economy could benefit disproportionately from exports."

He also played down chances of a credit crunch emerging in the coming months. "A credit crunch should not hamper the recovery, this is a risk scenario but not the most probable scenario."

In contrast to his unease at the European Monetary fund plans, Weber welcomed moves by Greece to get its finances in order.

"Greece has laid a credible strategy on the table and markets reacted by narrowing spreads, meaning Greece still has access to capital markets even if not under the same conditions as in earlier years."

"I don't see any need for further discussions," he said.

"What we need at the moment is a consolidation with resolve and it must follow now."

(Reporting by Krista Hughes; Writing by Marc Jones) (Reporting by Marc Jones)