German Chancellor Angela Merkel and British Prime Minister David Cameron strained yesterday to stress their unity on tackling Europe’s spiralling debt crisis but differed sharply on key points.

After tensions flared in the run up to their talks in Berlin, the two conservative leaders put a brave face on their differences but failed to make headway on crucial issues such as the role of the European Central Bank (ECB).

Mr Cameron renewed his appeal for all eurozone institutions to do their utmost to rescue the common currency, in res­ponse to a question about his call for the ECB to be used as a “big bazooka” for the euro.

But Mrs Merkel underlined her opposition to the ECB buying up bonds on a major scale and becoming the lender of last resort to debt-mired countries.

“You have to be careful not to pretend to have powers that you do not have,” she said, following re­marks she made this week that the ECB would not have the right to take such action under existing rules. “The markets will catch on quickly that that will not work.”

New ECB chief Mario Draghi yesterday also brushed off the political pressure, saying the bank’s overriding task was to safeguard price stability and that governments must put their finances in order to buck the crisis.

Mr Cameron and Mrs Merkel also differed on a financial transaction tax, which the British PM reiterated Britain could only accept if it were introduced on a global scale. Britain fears such a tax for the EU would drive banks out of the City of London, Europe’s top financial centre and a major revenue contributor.

Mrs Merkel has said she would be willing to press forward on the tax in the 17-member eurozone alone if the 27 EU members could not agree on it. Britain belongs to the EU but not the eurozone.

Mr Cameron nevertheless stress­ed his confidence in the eurozone’s ability to find its way out of its debt crisis and said Britain had a key stake in the euro’s success. He added, however, “It is obvious that we don’t agree on every aspect of European policy, but I am clear that we can address and accommodate and deal with those differences.”