Angela Merkel's hand-picked choice for the ceremonial post of president was expected to resign on Friday in a scandal over political favours, dealing a blow to the German chancellor in the midst of the euro zone crisis.

Christian Wulff, who has been under fire for months, was to give a statement at 1000 GMT. Merkel abruptly postponed a trip to Rome where she was to hold talks with Italian Prime Minister Mario Monti, and scheduled a news conference for after Wulff speaks.

Coalition sources from Merkel's centre-right government said they expected Wulff to step down.

The situation changed dramatically on Thursday evening when state prosecutors in Hannover asked parliament to end Wulff's legal immunity over accusations he accepted favours in a prelude to opening an investigation into him.

It is the first time ever that prosecutors have wanted to investigate a German president and the move triggered direct calls for Wulff to go from opposition parties.

In my view, this means that Christian Wulff has a duty to take this step, Social Democrat General Secretary Andrea Nahles said, adding her party would be happy to work with Merkel's conservatives to find a cross-party candidate to succeed Wulff.

Politicians from the Green Party echoed those calls and there was scant support to be heard from lawmakers in Merkel's centre-right coalition.

Until now, Wulff, who was conservative state premier of the state of Lower Saxony before becoming president, has said he would stay in office to clear his name. Wulff's lawyer has so far declined to comment on the prosecutor's request.

At a time when she is trying to solve the crisis enveloping the single currency, the last thing Merkel needs is the distraction of a presidential resignation and a potentially divisive search for a replacement.

Analysts say Wulff's departure is likely to become a problem for Merkel's Christian Democrats (CDU) who are struggling to retain control of the states of Schleswig-Holstein and Saarland in elections later this year.

A resignation by Wulff would also reflect badly on Merkel's judgement as she forcefully pushed for his election despite strong opposition from opposition candidate.

This won't be without consequences for Merkel, her reputation will suffer from it, said Gerd Langguth, political scientist at Bonn University.

She has a good ratings in opinion polls at the moment but what effects it will have on her depends who she names as a new candidate and whether they are convincing or not. If not, she could have problems, he said.

The role of German president is largely ceremonial but they are supposed to be a moral compass for the nation and Wulff has in the last few months become little more than a laughing stock in the German media.

APOLOGIES

Wulff belatedly apologised for misleading the Lower Saxony state parliament about a cheap 500,000 euro ($650,000) home loan from a businessman friend.

He has also apologised for leaving a message on the answering machine of the editor of Germany's best-selling Bild newspaper threatening a war if the daily published a story about his private finance dealings.

He was later criticised for accepting free upgrades for holiday flights for himself and his family as well as staying free of charge at the holiday villas of wealthy businessmen.

Parliament's immunity committee could debate the request to lift Wulff's immunity during the next parliamentary session on February 27.

A possible successor is Joachim Gauck, an anti-Communist human rights activist in East Germany who ran against Wulff in 2010 and embarrassed Merkel by forcing the election into a third round.

(Reporting by Madeline Chambers, Andreas Rinke and Thorsten Severin; Editing by Noah Barkin)