German Chancellor Angela Merkel said her government is committed to its negotiating stance over carmaker Opel, which has strongly favored auto parts maker Magna's bid, a newspaper reported.

There is a (negotiating) line that has been agreed at ministerial level, and that for me is the determining factor, Merkel was quoted as telling financial daily Handelsblatt.

Throughout negotiations with Opel's parent General Motors (GM), Germany's federal government has openly favored the Canadian parts manufacturer's bid over a rival one from Brussels-listed investment firm RHJ International .

The talks, which have been running for months, loom as a hot political issue ahead of federal elections on September 27 because of the state support required for the eventual buyer.

Merkel declined to speculate whether a deal would be completed before then. What is decisive is finding a sustainable, proper solution...I am not committing myself to a date, she said.

A further complicating factor is that GM, which had leant toward the RHJ bid, may now try to raise the $4 billion it needs to keep Opel instead of selling it, sources told Reuters earlier this week, days after the GM board confounded expectations by declining to pick a winner.

Germany's economy minister said such speculation was hardly realistic.

POLITICAL FAULT LINES

Cracks in Germany's facade of political unity appeared on Thursday when Guenther Oettinger, the state premier of Baden-Wuerttemberg and a leading figure in Merkel's conservative CDU party, said the Magna option was not the only one.

Oettinger's state is home to one in eight of Germany's population as well as the headquarters of Porsche

and Daimler but hosts no Opel plants.

Berlin's preference for Magna, bidding alongside Russian partner Sberbank , has been rooted in hopes its restructuring plan would limit German job cuts while reducing GM's involvement to a non-controlling one.

The U.S. carmaker collapsed after years of mismanagement, finally forcing it to seek salvation in a U.S. government-backed restructuring under bankruptcy law pushed through in a whirlwind 40 days.

Merkel said in the interview it had not been a mistake to come out so strongly in favor of Magna early in the game.

If the federal government did not know and say what it wants, it could not hold its ground in talks with GM, she said.

Intellectual property concerns have led GM to favor RHJ, which is connected to private equity group Ripplewood.

Sources involved in the negotiations have also said that RHJ would grant GM a right of first refusal to re-acquire control of Opel at a later time.

Merkel said in the interview that GM buying Opel back was not in the long-term interests of her government.

We need a sustainable concept for the future of Opel. Ripplewood follows the concept of a financial investor, she said. She did not indicate whether she might support RHJ if the firm found a partner from within the auto industry.

(Reporting by Christiaan Hetzner, Madeline Chambers and Maria Sheahan; writing by John Stonestreet; editing by Dan Lalor)

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