BERLIN – Germany kept alive hopes that the 17-nation euro currency can survive the sprawling debt crisis when lawmakers in Europe’s largest economy voted overwhelmingly on Thursday in favor of expanding the powers of the eurozone’s bailout fund.

The vote strengthened Chancellor Angela Merkel’s center-right coalition, which had struggled to win support from a bloc of rebellious members, and could bolster her ability to negotiate new European crisis measures.

While many investors and experts believe new steps will be required in Europe, such as letting Greece write off more of its debt pile, Germany’s approval of the fund’s new powers and scope was necessary to avoid a new bout of massive market turmoil.

“The support of the Bundestag is an important step for stabilizing the eurozone,” said Michael Kemmer, head of Germany’s Bank Federation. “With that, they have set a course that leads out of the debt crisis.”

The $600 billion fund will be able to buy government bonds and lend money to banks and governments before they are in a full-blown crisis, making Europe’s response to market jitters more rapid and pre-emptive.

Germany, which pays the lion’s share of European bailouts, became the 13th member of the eurozone to support the expansion of the rescue fund, the so-called European Financial Stability Facility, or EFSF. Cyprus and Estonia also passed the proposed expansion on Thursday.

Austria’s parliament is widely expected to pass the measure today, the same day Germany’s upper house of parliament is set to finalize Thursday’s vote, while the Netherlands is expected to approve it in the first week of October.

The biggest remaining hurdle is the final country to vote – Slovakia – where the government will not have enough support to pass it if the leader of the junior coalition Freedom and Solidarity party follows through with threats to vote against the fund’s expansion. Its parliament is to vote in October.

In Berlin, 523 lawmakers in parliament, the Bundestag, voted in favor of expanding German participation to guarantee loans. Eighty-five voted against it and three abstained.

“It was a strong statement of Angela Merkel’s position. She has the backing and the support of the coalition and she is able to negotiate on the European level,” Peter Altmeier, the parliamentary whip for Merkel’s Christian Democrats, said after the tally was announced.

Markets appeared calmer even before Thursday’s votes, following weeks of turbulence triggered by uncertainty over Germany’s position on the fund. The euro also traded slightly higher.

The lingering problem, however, is that investors are resigned to the fact that Greece will have to default – that is, impose tougher losses on its bondholders.