Page last updated at 10:21 GMT, Monday, 8 June 2009 11:21 UK

State rejects Arcandor aid claim

Demonstrators in Hamburg on 7 June
Demonstrators in Hamburg have called for state aid for Arcandor

The German government has rejected a request for 650m euros ($930m; £561m) of loan guarantees from Arcandor, owner of Karstadt and 52% of Thomas Cook.

The company had said it might have to file for insolvency on Monday if it did not receive government aid.

Earlier, German finance minister Peer Steinbrueck told ARD television: "a bankruptcy is not totally excluded".

Arcandor shares fell 31% by late-morning. It is awaiting news on a separate request for 437m euros credit.

Arcandor needs financing because about 600m euros of its loans need refinancing at the end of the week.

It has held talks with Metro to discuss merging their stores. The talks were a precondition for the government to consider the aid request.

Thomas Cook branch
Employs 50,000 staff
Owns 52% of Thomas Cook, retailer Karstadt and home-shopping brand Quelle
Was called KarstadtQuelle until 2007

Arcandor said that at talks with Metro and others on Sunday, there had been an agreement to make "constructive contributions" to the idea of a merger and to pursue the proposals quickly.

Last week, a Thomas Cook spokeswoman said the travel company was "completely ring-fenced" from Arcandor.

The German government has a 100bn euro fund to provide temporary loans for firms hit by last year's financial crisis and its aftermath. But this does not apply to companies that first got into difficulties before 1 July 2008.

Critics of the claim said that Arcandor had been in trouble before the credit crunch began.

The European Commission also had reservations about the aid.

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