Time is running out for German retail group Arcandor after Berlin rejected two separate requests for state aid on Monday, pushing it closer to insolvency. But Chancellor Angela Merkel, bolstered by Sunday's European election results, can afford to stay firm.

First, a German government steering committee refused to award €650m ($901.2m) in government loan guarantees.

Then the government said no to a separate request for a loan totalling €437m to stave off insolvency. German news agency dpa cited unnamed government sources as saying Arcandor's creditor banks and shareholders weren't contributing enough to help the company. It's unclear whether the government's decision is final.

Der Speigel Online