BERLIN, GERMANY - European Union Industry Commissioner Guenter Verheugen on Tuesday signalled support for a German offer to help ailing carmaker Opel, saying he welcomed measures that would prevent the firm from disappearing.

Chancellor Angela Merkel said on Monday her government was ready to guarantee funds for Opel, adding a decision should be made by Christmas on whether the General Motors' unit would need a guarantee from the federal government and German states.

Verheugen told Deutschlandfunk radio the European Commission would have to examine any possible guarantees, but added: "I'd welcome it if everything was done to prevent an important and traditional car producer in Europe from dropping out of the competition for reasons it's not responsible for."

The automotive industry, a powerful lobby in Europe's largest economy, has been hit by a downturn in demand in the wake of the international financial crisis.

Opel's woes have been aggravated by troubles at U.S. parent GM, which said this month its cash holdings could fall short of the minimum needed to run its business without new funding.

Verheugen suggested he would not in those circumstances object to the German offer on competition grounds.

"Other competitors don't have the same problem Opel has," he said. "I'd like to know why tens of thousands of workers should be punished for a U.S. parent firm on the verge of bankruptcy."

Merkel has said her government would need to make sure that any money it provided to Opel stayed in Germany.

Later on Tuesday, Finance and Economy Ministry officials are due to meet with representatives of German states where Opel has factories. Opel employs about 25,000 in its German plants in Ruesselsheim, Bochum, Kaiserslautern and Eisenach.

The carmaker on Friday became the first European carmaker to ask for government help with guarantees to finance development and assembly facilities should GM stop supplying cash.

(Reporting by Carsten Lietz; Writing by Kerstin Gehmlich, editing by Will Waterman)