(Adds Merkel reaction)
By Noah Barkin
BERLIN, Aug 11 (Reuters) - German chancellor candidate Frank-Walter Steinmeier urged the British government on Tuesday not to bow to the City of London and backtrack on reform of global financial rules at a G20 summit in Pittsburgh next month.
Speaking at a Berlin news conference aimed at rejuvenating his struggling campaign to unseat Chancellor Angela Merkel, Steinmeier said he feared countries could use the nascent recovery in markets and the economy as an excuse to drop reforms agreed at prior G20 summits.
"The improvement in the economy has clouded the view that we need to continue to work on the causes of this crisis," Steinmeier, a member of the centre-left Social Democrats (SPD), told reporters.
"As soon as signs of a recovery emerge, the readiness to decisively implement agreements reached in Washington and London recedes. I hope that we don't experience another setback in Pittsburgh."
Steinmeier's SPD trails Merkel's conservatives by double digits in opinion polls before the Sept. 27 election and he has been criticised for a lacklustre campaign.
Steinmeier singled out Britain for criticism, echoing his party colleague, Finance Minister Peer Steinbrueck, and Merkel herself, who cautioned last month against allowing bankers in New York and London to dictate policy.
"I don't know what the position of the British government will be, but one hears voices of resistance from the City of London, where the financial markets are currently being rediscovered," Steinmeier said.
"I hope this will not have a decisive influence on the position of the British government in Pittsburgh. But if you are seeing signs of backsliding you are not mistaken."
TRAILING IN POLLS
Last week he unveiled a plan to create 4 million new jobs in Germany over the next decade, but was hit by criticism from other parties that his "10-year plan" was reminiscent of communist economic programmes in the former East Germany.
He defended the programme on Tuesday and accused Merkel's conservatives of lacking an employment plan of their own -- a criticism she rejected later in the day.
"What I don't think is good is to play games with numbers that are impossible to forecast," she told RTL television, referring to the job creation plan.
"As politicians we should have ambitious goals. But we shouldn't promise things we can't be sure of," Merkel added.
Steinmeier's task has been complicated by the fact that he is also foreign minister in Merkel's current "grand coalition" government.
This has made him more reluctant openly to criticise Merkel, who has shifted her own party to the left, capturing centrist voters who may have supported the SPD in the past.
Steinmeier warned against reading too much into his party's flagging poll numbers, estimating that 60 percent of Germans had yet to decide who they would vote for or even whether they would go to the polls next month.
"I am telling you, this election is not decided," he said. (Writing by Noah Barkin, editing by Tim Pearce)