Germany is easing its opposition to a bigger European bailout fund, officials said, smoothing the way for the world's leading economies to secure nearly $2 trillion in firepower to prevent more fallout from the euro-zone's sovereign-debt crisis.

Finance leaders from the Group of 20, meeting in Mexico City this weekend, are trying to build massive international resources by the end of April to convince financial markets they can prevent the deep problems in the euro zone from inflicting more damage on a still-fragile world recovery.

It would mark their boldest efforts since 2008 when the G-20 mustered $1 trillion to rescue the world economy from the credit crisis, which blew up in the United States and caused the worst recession since the 1930s.

They are demanding that European countries build their war chest first and then other G-20 nations would contribute extra money to the International Monetary Fund. As Europe's richest economy, Germany's support for a larger European fund is critical.

A senior G-20 official said Berlin was prepared to discuss boosting the firewall in March, but it saw no reason to increase the bailout fund for now because the situation in financial markets has been improving.

The plan is to merge Europe's temporary and permanent bailout funds -- the European Financial Stability Facility and the European Stability Mechanism, respectively -- to create one 750 billion euro ($1 trillion) fund. Increased IMF resources would back that up.

Everyone in the euro zone and even in European Union is reasonably happy with combining the ESM and the EFSF, even Germany, but it is too early to say if this will be decided at the EU summit at the beginning of March, said Margrethe Vestager, economy minister of current EU president Denmark.

Merging the funds would mark a softening of Berlin's stance. It has warned that a bigger fund would remove pressure on deeply indebted countries to enact the tough fiscal measures and economic reforms needed to bring their budgets under control.

G-20 finance chiefs are piling the pressure on Germany as they try to line up the roughly $2 trillion in resources by the time they next meet in April and draw a line under the two-year-old crisis in the euro zone.

I do want to encourage Germany to take that leadership role very seriously and come up with an overall euro-zone plan, said Canada's Finance Minister Jim Flaherty.

Some diplomats have said Germany's reticence to back the bigger bailout plan was linked to a key vote on Monday by German lawmakers on Greece's new financial lifeline, another part of the broader push to ring-fence the crisis in the euro zone.

Europe's problems have weakened the global recovery and roiled financial markets, which have locked highly indebted countries -- Greece, Ireland, and Portugal -- out of debt markets and forced them to seek bailouts. Italy and Spain also are under threat, and bank credit has tightened.

German Finance Minister Wolfgang Schaeuble told bankers in Mexico City that he was worried that the root causes of Europe's problems have not been tackled sufficiently and showed no sign that he was ready to announce a shift in course on issues such as common euro-zone bonds as well as bigger bailout funds.

It does not make any economic sense to follow the calls for proposals which would be mutualizing the interest risk in the euro zone, nor in pumping money into rescue funds, nor in starting up the [European Central Bank] printing press, Schaeuble said.

Big Bazooka

A European agreement during March to merge the EFSF and the ESM to create a $1 trillion war chest would clear the way for other G-20 countries in April to meet the IMF's request for $500 billion to $600 billion in new resources, on top of its current $358 billion in funds.

Put together, this would total around $1.95 trillion in firepower. But the G-20 has no intention of easing the pressure on Europe by giving it a strong signal now that new IMF money is in the bag.

A G-20 communique at the end of the ministerial meetings on Sunday will merely state that the world's leading economies will review the resources of the IMF in April without setting a date for a deal, G-20 officials said.

European Commissioner for Economic and Monetary Affairs Olli Rehn said more funds are essential. [T]o overcome the crisis, you have to get ahead of the curve and have a big enough bazooka, he told reporters. The negotiations are now going on, Rehn said, adding he was confident that a decision to merge the European funds would be taken in March.

An official in the euro zone said a deal is unlikely to come in time for a summit of EU leaders next week, which could nonetheless reveal some flexibility by Berlin: What we can expect, at most, is a reference in the conclusions suggesting Germany is not closing the door.

Germany Needs Time

Diplomats said Germany appears to be playing for time. It faces a critical vote on Monday to win support in the German parliament for Greece's second rescue package. Many Bundestag members are skeptical that Greece can meet tough fiscal conditions required to bring its public debt down to 120 percent of gross domestic product by 2020.

Similar votes are scheduled in the Netherlands and Finland next week. Germany also wants to see whether enough investors sign up for Greece's debt swap, which Athens wants to complete by March 12, a euro-zone official said.

Most euro-zone countries are ready to move now, but I am afraid that Germany will need more time to agree to the increase, mainly to be able to better manage the Bundestag, one official said.

The United States has said it will not provide more funds for the IMF. But it is not standing in the way of other countries lending to the fund and is keeping the pressure on Europe to first put forward more of its own money. I hope that we're going to see, and I expect we will see continued efforts by the Europeans ... to put in place a stronger, more credible firewall, U.S. Treasury Secretary Timothy Geithner said on Saturday.

Policy makers said they were hopeful that putting in place a strong firewall against more crises in Europe would help strengthen the world economy.

The economy is somewhat picking up in the world as a whole, including Japan, and [we] want to put an end to the Europe crisis in the early spring and to accelerate the global economic growth, Japan's Finance Minister Jun Azumi said.

(Additional reporting by Louise Egan, Glenn Somerville, Tetsushi Kajimoto, Alonso Soto, Dave Graham, and the G-20 reporting team; Writing by Stella Dawson; Editing by William Schomberg)