German Chancellor Angela Merkel is being buffeted by domestic political turbulence, threatening to distract her efforts to follow through on a European summit agreement last week to tackle the euro debt crisis.

Christian Lindner, the general secretary of Merkel's Free Democratic coalition partner, unexpectedly quit yesterday amid a party tussle over bailouts. Separately, Merkel's spokesman said the chancellor had full confidence in Christian Wulff, Germany's president, after a Bild report that he misled lawmakers over a 500,000 euro ($650,000) home loan.

The political turmoil engulfed Merkel's administration five days after she secured what she called a “breakthrough” European deal to enforce stricter budget rules and to stem the financial contagion now in its third year. That uncertainty may disrupt her efforts to restore market confidence by pushing the steps agreed on in Brussels through parliament in Berlin.