Angela Merkel in running for peace prize

German Chancellor Angela Merkel. Photo / AP

Angela Merkel is suffering her lowest approval rating in four years amid a domestic backlash over her handling of the European refugee crisis, yet speculation is mounting she will win this year's Nobel Peace Prize for her leadership on the issue.

The German Chancellor has emerged as the firm favourite for the prize, which will be announced on Friday.

Merkel is facing growing opposition to her refugee policy at home.

Her personal approval rating with voters has plummeted nine percentage points in a single month, according to the findings of a new opinion poll.

Nominations for the prize are kept secret but the Nobel Committee confirmed there have been 276 nominations this year.

Kristian Berg Harpviken, an expert who publishes a shortlist of likely winners each year, named Merkel as favourite.

Merkel has also been tipped to win for her efforts to end the Ukraine war, after she brought Vladimir Putin and Ukraine's Petro Poroshenko back to the negotiating table.

Her handling of the refugee crisis has dominated headlines since she opened Germany's doors to hundreds of thousands of asylum seekers while other European countries were scrambling to keep them out.