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BERLIN (Reuters) - The German government has capped the amount of "Hermes" export guarantees it provides for trade with Turkey at 1.5 billion euros (1.32 billion pounds), a foreign ministry spokesman said on Friday, as a rift between the two NATO powers deepens.

The "Hermes" guarantees provide German government protection for German companies when foreign debtors fail to pay.

Chancellor Angela Merkel, who is seeking re-election on Sunday, has vowed to restrict trade with Turkey to pressure it into releasing around a dozen German or Turkish-German citizens arrested in recent months on political grounds.

Bilateral relations, already strained, have soured further over Turkish President Tayyip Erdogan's crackdown on opponents following a failed coup last year. Germany and its partners in the European Union say the crackdown and a referendum that granted Erdogan sweeping powers undermine Turkish democracy.

"The government has agreed to limit so-called Hermes debt guarantees for business with Turkey to a total amount of 1.5 billion euros for 2017," a spokesman for the Foreign Ministry told a regular government news conference in Berlin.

Germany is the second biggest foreign investor in Turkey, with investments totalling more than 13.3 billion euros ($15.9 billion) since 1980, according to the German foreign ministry.

(Reporting by Sabine Siebold; Writing by Caroline Copley; Editing by Gareth Jones)

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Reuters