German Chancellor Angela Merkel has said eurozone countries need to give Greece time to find a solution out of its debt crisis, warning that a debt restructuring could have dire consequences.

"It is in Europe's common interest to give Greece time," Merkel said in a late-night interview Friday on German television channel ARD.

"We need to consider the secondary effects" of a restructuring, she said.

"We don't yet have the instruments to carry out such an event to know for sure that many, many in Europe aren't drawn in," she added.

Greek Prime Minister George Papandreou said Friday he was negotiating a new bailout worth some 110 billion euros ($155 billion).

Germany wants a second rescue package to include contributions by private creditors, banks and investment funds as the price of Berlin's involvement.

The European Union wants private bondholders to contribute to a rescue in an "informal and voluntary" rollover of Greek government bonds.