UPDATE 3-Germany answers critics with new stimulus package

(Adds Merkel quotes, EU and auto industry reaction, details)

By Noah Barkin and Madeline Chambers

BERLIN, Jan 13 (Reuters) - Germany unveiled a new 50 billion euro ($66 billion) stimulus package on Tuesday to shield its economy from the worst recession since World War Two and silence critics who have accused it of doing too little to boost growth.

Chancellor Angela Merkel's "grand coalition" of conservatives and Social Democrats (SPD) agreed to billions of euros in new investments in infrastructure, modest tax cuts and state guarantees for struggling German firms.

Economists welcomed the package but said it was unlikely to have more than a marginal effect on Europe's largest economy, which fell into recession last year and is expected to contract by 2 percent or more in 2009, its worst post-war performance.

"A government growth programme like this, combined with measures taken in neighbouring countries, cannot prevent recession but can limit its severity. That is the goal," German Finance Minister Peer Steinbrueck told reporters.

The performance of the German economy and success of the stimulus package will be crucial to Merkel's re-election hopes in September's federal vote.

Merkel's government pushed through a package valued at 31 billion euros late last year, but new government spending accounted for only about a third of the total, opening Berlin up to criticism from other European countries.

French President Nicolas Sarkozy last month accused Berlin of "thinking" while Paris was "working".