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German Chancellor Angela Merkel arrives for the weekly cabinet meeting at the Chancellery in Berlin, Germany, October 18, 2017. REUTERS/Hannibal Hanschke

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BRUSSELS (Reuters) - German Chancellor Angela Merkel praised Turkey on Thursday for its handling of refugees but said she was very concerned about a breakdown in the rule of law and voiced support for reducing EU funds that are being channelled to Ankara as part of its drive to join the bloc.

"In terms of our democratic values, developments in Turkey have been very negative. Not only are Germans being arrested, but the entire rule of law in Turkey is moving in the wrong direction. We are very worried about this. And I will back a reduction in pre-accession funds," Merkel said at the start of an EU summit.

"I will also make clear that Turkey is doing a great job on the refugees and that we have obligations under the EU-Turkey deal. We have promised 3 billion euros for the coming years in addition to the 3 billion that we have already committed. We need to deliver on this promise," she added.

(Writing by Noah Barkin; Editing by Alastair Macdonald)

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