Some 3,000 volunteers in the district of Luechow-Dannenberg southeast of Hamburg worked through the night to reinforce the leaking dykes along the swollen Elbe river and keep tributaries from bursting their banks.

At the confluence of the Elbe and Jeetzel rivers, the medieval city of Hitzacker whose old town is under water reported some relief.

"The flooding is sinking about one centimeter (0.4 inches) every two hours," a spokeswoman for Luechow-Dannenberg said, noting that a quickly erected retaining wall had sunk the level of the Jeetzel by 50 centimeters, also easing the pressure on the dykes in nearby Dannenberg.

She said authorities hoped most of Hitzacker's old town would be dry by Friday.

Chancellor Angela Merkel toured Hitzacker in rubber boots Sunday before taking a helicopter flight over affected regions nearby.

Meanwhile the government of the eastern state of Saxony, upriver on the Elbe where the flooding began in Germany, agreed to an initial 20-million-euro (24-million-dollar) package to fund low-interest loans for homeowners and companies hit by the flooding.

An additional 10 million euros was earmarked for dyke repair.

The Elbe flooded parts of Saxony earlier this month as snow melted at the beginning of spring. It rose to more than three times its normal level before receding.

The historic state capital of Dresden, whose prized Baroque and Rococo buildings were badly hit by floodwaters in 2002, escaped damage this time.

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