German Chancellor Angela Merkel said Monday that transatlantic ties, including the negotiations on a free trade deal, are being tested by the alleged extensive U.S. spying in Germany and Europe.

"The transatlantic relationship and also the negotiations for a free-trade agreement are now without doubt being put to the test," Merkel told the lower house of the German parliament, referring to the alleged U.S. spying in Germany that included tapping of Merkel's own phone communications.

"The allegations are serious," Merkel said, "They must be explained, and more importantly, new trust must be built for the future."

But she added that the German-U.S. relationship was of "paramount" importance for Germany and Europe.

Merkel has earlier made it clear that she would not put the German-U.S. ties at risk as Berlin ruled out granting whistleblower Edward Snowden asylum in Germany which would be a diplomatic affront against the U.S..

The German government is looking for ways to question Snowden in Russia, where he has been granted temporary asylum after exposing massive surveillance by U.S. intelligence services.

German and U.S. intelligence officials are in talks in order to reach an anti-spying agreement, hoping to alleviate the public outcry over media reports that U.S. intelligence agencies have monitored tens of millions of phone calls in Germany and other European countries.