BERLIN, Jan 25 (Reuters) - Germany's Angela Merkel and European Commission chief Jose Manuel Barroso stressed in talks on Tuesday the need for tighter coordination in the euro zone and made no mention of disagreement about the bailout fund.
The chancellor and Barroso met for dinner beyond the reach of the media at a government guesthouse near Berlin and issued only a brief statement about their meeting, which came after a successful debut bond auction by the euro zone rescue fund.
Merkel's spokesman Steffen Seibert said in a statement that the two had "exchanged views about the situation of the euro".
"At the centre of it were the need to reduce debt, the future stability and growth pact and measures to improve the competitiveness of the European Union," said the statement.
The chancellor and commission chief agreed that "stronger coordination of economic policy in the euro zone is of the utmost importance".
Barroso had warned ahead of the dinner with Merkel that the currency bloc needed to avoid "procrastination", which was seen as a reference to Berlin's outspoken rejection of his proposals to increase the European Financial Stability Facility (EFSF).
He wants the 440 billion euro fund, which was set up last year after the Greek debt crisis and already tapped by Ireland, to be beefed up to provide stronger defences for the euro.
But Merkel and Finance Minister Wolfgang Schaeuble rule out increasing the headline sum, wary in a year with seven regional elections in Germany of exacerbating German taxpayers' annoyance at having to fund bailouts for overspending euro zone partners.
They are focusing instead on finding ways to maximise the full capacity of the EFSF, whose lending clout is really only about 250 billion euros because of the guarantee system required to maintain its triple-A credit rating.
The EU's top economic official, Olli Rehn, was also in Germany on Tuesday, attempting to persuade Merkel's junior coalition allies, the Free Democrats (FDP), to soften their opposition to increasing the fund.
FDP leader Guido Westerwelle, the foreign minister and deputy chancellor suffering a slump in popularity, said after meeting Rehn that he was still not convinced the euro zone bailout fund should be expanded.
"To discuss expanding the rescue fund today, when only 10 percent has been used, is not convincing," said Westerwelle.
(Writing by Stephen Brown)