BERLIN (BLOOMBERG) - Chancellor Angela Merkel ruled out any further loosening of virus measures, saying that a doubling in the number of daily cases in Germany in the last three weeks must be addressed.

Europe's largest economy recorded the biggest increase in coronavirus cases in nearly four months on Tuesday (Aug 18), fuelling fears about a resurgence of infections across the continent.

The recent trend "should not continue and we need to contain it", Dr Merkel said in Dusseldorf, adding that fines will need to be levied for people flaunting hygiene and social distancing rules.

"We are in the midst of the pandemic," she said in her first public comments since the recent uptick in Germany.

European officials are already tightening restrictions on movement again in an effort to prevent summer partying and travel from spreading the disease.

Spain and Italy have shut nightclubs and Greece limited hours for bars and restaurants to try to avoid more drastic measures after the holiday season winds down.

Germany is requiring people returning from heavily affected areas like Spain to quarantine for two weeks or present a negative test to thwart the disease from spreading in schools and workplaces.

"More mobility and contact between people leads to higher numbers of cases," Dr Merkel said.

"The virus is here, even if it's not visible. There's no vaccine and no medication."

Governments are desperate to foster a recovery after activity collapsed in the second quarter, but a failure to act decisively to prevent a widespread resurgence could mean more pain for the economy later on.

Officials in Austria and Ireland will discuss possible new restrictions later on Tuesday, while the Netherlands may reintroduce limits on numbers at group gatherings.

Germany remains a primary concern.

Credit risk advanced, with investors taking fright at the uptick in new cases.

An index of default risk on Europe's highest quality companies rose and an equivalent measure for junk bonds also gained.

There were 1,693 new German cases in the 24 hours through Tuesday morning, the most since April 25, according to data from Johns Hopkins University.

The number of daily cases reached almost 7,000 at the peak of the pandemic in the spring.

There have been a number of outbreaks in recent weeks in settings such as larger family events and leisure activities, as well as in educational and professional facilities, according to the country's Robert Koch Institute.

"If we can manage this, the good news is that there is a lot of public life that we can allow to happen," Dr Merkel said.