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By Louis Charbonneau

BERLIN, July 22 (Reuters) - German Chancellor Angela Merkel said on Sunday Germany would not give in to the demands of the Taliban to withdraw its troops from Afghanistan and would not allow itself to be blackmailed.

"We will not react to demands from the Taliban," Merkel said in an interview with Germany's ARD public television when asked if she would consider bringing German troops home. "We will not give in to blackmail, that would be dangerous."

She said she had "no new hard information" about the status of a German engineer held hostage in Afghanistan or the circumstances surrounding the death of another German hostage, who the government believes died of stress in captivity.

A Taliban spokesman claimed the two engineers had been shot by the Taliban after Germany failed to contact it for negotiations. Afghan and German officials cast doubt on this, saying the spokesman did not speak for the kidnappers.

"We can't confirm what we've heard over and over again from the Taliban," she said, adding that a crisis task force at the Foreign Ministry was working around the clock to secure the release of the second hostage.

Merkel declined to say whether Germany would consider paying a ransom to the kidnappers.

Germany has over 3,000 German troops stationed in Afghanistan's relatively peaceful north as part of a NATO peacekeeping force.

Merkel reiterated that she wanted Germany to fully renew its Afghan peacekeeping mandate when it expired later this year. (Additional reporting by Iain Rogers)

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