MADRID - Germany will consider measures to compensate Spanish farmers for the loss of sales due to their produce being blamed for the outbreak of E.coli in Europe, a statement from Spain's presidential office said on Thursday.

German Chancellor Angela Merkel told Spanish Prime Minister Jose Luis Rodriguez Zapatero during a telephone conversation that she regretted the damage suffered by Spanish farmers and would seek a solution in accordance with European Union legislation, the statement said.

Zapatero had phoned Merkel on her return from a trip to Asia, it said.

Both leaders agreed to bilateral talks in the next few days and to consult European Union authorities.

Spain is threatening legal action and wants compensation for its farmers, who say lost sales are costing them 200 million euros ($290 million) a week and could put 70,000 people out of work.

Merkel told Zapatero that a decision taken by the health authorities in the German state of Hamburg, was, in her view, in line with German legislation.