By Andreas Kroener
Calling Lagarde an experienced "figure of excellent standing" at a meeting of Bavarian conservatives, Merkel said the issue of who would be in the running for the IMF leadership post was currently being worked out.
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"There is broad support for Europe to put forward a candidate. Of course we must discuss this with emerging countries," said Merkel, adding however that Berlin's favorable view of Lagarde did not constitute affirmation of her candidacy.
The battle over who should lead the Washington-based institution has heated up since Dominique Strauss-Kahn quit the post to devote his time and energy to defending himself against U.S. charges he tried to rape a chambermaid.
Diplomats have said some EU countries question whether Lagarde could be anointed before a special court decides next month whether she should be investigated in a French legal case, while emerging countries want end to Europe's grip on the job.
Lagarde is widely seen as leading the race for the top job in global finance. But developing countries, whose clout in the world economy has grown, maintain that Europe and the United States should not seal a backroom deal over the appointment.
German Finance Minister Wolfgang Schaeuble has also said he has a high opinion of Lagarde, a stance he repeated in comments to be published on Sunday in newspaper Bild am Sonntag.
"Should Christine Lagarde decide to be a candidate, Europe would have the best chances of again filling the post," he said. "She would be extremely respected and valued in the entire world of finance."
(Writing by Brian Rohan)