German government warms to idea of bailout for Opel

The German government is considering a bailout for GM Europe's Adam Opel division. The German-based Opel brand has asked both federal and state governments in Germany for loan guarantees.

As GM's global financial situation deteriorates rapidly, suffering heavy losses, collapsing sales and bleeding cash, it's lack of liquidity is threatening the viability of one of Germany's oldest automakers.

Last week the German government turned down a request by Opel for 40 billion euros in guarantees to the German auto industry. But over the last few days, the government has come around to the idea that something needs to be done in order to shore up Germany's prime industrial sector.

Opel Managing Director Hans Demant told Reuters that government aid would be invested in products and manufacturing plants in Germany and would not be allocated outside of Europe.

The German business news daily Handelsblatt has also reported that government sources are saying the German state of Hesse, where Opel's Russelsheim headquarters are based, may provide some 500 million euros in loan guarantees to the trouble automaker.

A decision from Berlin is expected soon.