Foreign Minister Guido Westerwelle "is deeply concerned about the current escalation in political tensions in Egypt," his spokesman Andreas Peschke told reporters on Friday. "This is in his view a key moment of truth for political change in Egypt."
The spokesman underlined that Westerwelle felt demonstrators had a right to peaceful assembly and had urged both sides to refrain from bloodshed.
At least three people have already been killed as tens of thousands took to the streets in Cairo, El-Mahalla and Alexandria, resulting in clashes between pro and anti-Morsi demonstrators. A further 139 were injured, the Egyptian health ministry told the Arabic-language Al-Ahram newspaper on Saturday.
One man, a 21-year-old American teacher, was stabbed in the chest as he photographed demonstrators in the northern port town of Alexandra, al-Jazeera said on Saturday. The incident prompted the USA to warn against non-essential travel to the country and announced it would be withdrawing part of its diplomatic team there.
Islamist groups called on their supporters to camp out indefinitely in a Cairo square ahead of a larger demonstration on Sunday when the rival, mainly secular opposition plan to mark the first anniversary of Morsi taking power by submitting a petition with over 20 million signatures demanding his resignation and fresh elections.
"What Egypt needs above all are reforms so that the economic situation will improve and people have real future prospects," spokesman Peschke said. "That must be, in our view, the goal of all political forces in Egypt."
Germany, Europe's biggest economic power, has recently stepped up its criticism of crackdowns on civil society in Egypt, most recently slamming a court's sentencing of two staff members of a German non-governmental organisation for working illegally in the country.