Germany's government and the main opposition party have agreed the outlines of a European financial transaction tax.

The agreement potentially opening the way for parliament to approve a fiscal pact and permanent rescue scheme for the euro zone.

The deal could be finalised next week when the main parties' parliamentary leaders meet on Monday, followed by the party chiefs on Wednesday.

The centre-left Social Democrats (SPD) have linked progress on the tax as well as growth-boosting measures to their approval for the pact and for the euro bailout fund, the European Stability Mechanism (ESM).

Chancellor Angela Merkel needs their backing to get the required two-thirds majority in parliament.

But agreement on measures to boost European economic growth remains elusive.

Participants in a working group on the transactions tax did make progress. "We have reached a breakthrough. The paper proposed by the finance ministry is a path to agreement on the main points," said an MP from Merkel's Free Democrat allies, Volker Wissing.

Germany working against a deadline

Germany is chasing a tight deadline, with Chancellor Merkel's budgetary discipline pact, agreed by 25 European states, due to be ratified by July 1 - when the ESM also takes effect.

It would be embarrassing if Germany, which as euro zone paymaster dictates much of its crisis response, missed the deadline, though it would only cause technical problems if the delay was significant, analysts say.

With Britain and some other European Union members opposing a financial transaction tax, while some push for common euro zone bonds, which Angela Merkel rejects, Germany will not be able to get such a tax imposed across Europe.