June 2 (Bloomberg) -- German Finance Minister Peer Steinbrueck said he opposes political interference to tame rising oil prices because such steps backfired in the past.

In comments to reporters today in Frankfurt, Steinbrueck, a Social Democrat, urged European Union leaders and their counterparts in the Group of Eight industrial states to stick to a 2005 accord that leaves energy markets free of price caps.

``We should stick to the Manchester Declaration,'' Steinbrueck said as European finance ministers gathered to mark the European Central Bank's 10th anniversary. ``That means not to react politically and try to intervene. In the past, it has turned out to be a mistake quite often.''

Pressure is growing in the EU for concerted action on oil prices. French Finance Minister Christine Lagarde wants G-8 members, meeting in Japan next month, and EU states to take action to restore oil prices to a ``tolerable'' level, the Financial Times Deutschland reported, citing a letter from her ministry.

In a declaration that followed a meeting in Manchester in September 2005, EU leaders agreed to avoid direct measures to influence oil prices. ``Distortionary fiscal and other policy interventions that prevent the necessary adjustments should be avoided,'' they stated.

The price of oil has almost trebled since that agreement and reached a record $135.09 last month. A barrel of crude oil for delivery in July traded at $126.54 at 11:16 a.m. Berlin time in electronic trading on the New York Mercantile Exchange.

Contradicting Merkel

German Chancellor Angela Merkel, whose Christian Democrats are in coalition with the Social Democrats, supports coordinated action by the G-8 to control energy prices. After meeting with Prime Minister Yasuo Fukuda in Berlin yesterday, Merkel said they had discussed the necessity of more transparent markets. G-8 leaders will meet in Hokkaido July 7-9.

``I support a proposal to react in a coordinated manner --it depends of course on what precise action to take,'' Merkel said at a joint press conference in Berlin.

Fukuda was more skeptical, responding that the oil price -- which has gained 33 percent this year -- is determined by the market, with little scope for political action. Still, surging energy prices ``should be taken very seriously'' and mid-term and long-term measures should be considered, he said.

To contact the reporter on this story: Christian Vits in Frankfurt at cvits@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net

Last Updated: June 2, 2008 05:49 EDT