Merkel's party to start early coalition talks Friday

German Chancellor Angela Merkel's conservatives will start talks with their defeated centre-left election rivals Friday, the first step on a long and thorny road that could end in a 'grand coalition' government.

Merkel, despite her September 22 election triumph, needs to team up with either the Social Democrats (SPD) or the Greens party to ensure a majority after her previous allies, the Free Democrats, failed to win any seats.

Whatever the eventual outcome, the poker-game like talks are expected to drag on for weeks, as they have in the past, as negotiating partners will seek to extract the highest possible price on policies and ministerial posts.

The SPD is torn on whether to again govern in the shadow of the popular Merkel, as it did from 2005-09, when it failed to earn much credit for their joint achievements and ended up suffering two bruising election defeats in a row.

While another stab at power and winning ministerial posts is tempting for party leaders, many rank-and-file members of the 150-year-old party would prefer to attack the Merkel government from the opposition benches and regroup.

Merkel's Christian Democrats (CDU) for their part have sought to draw a line in the sand, vowing to block any of the tax increases the SPD demanded on the campaign trail to finance public spending.

'No tax rises'

"With us there will be no tax rises," CDU parliamentary leader Volker Kauder told ARD public television, stressing this was also Merkel's position.

A day earlier, Bavaria's powerful state premier and Merkel ally Horst Seehofer had vowed that "the citizens have my word" that the taxman would not place any additional demands on them.

SPD chief Sigmar Gabriel has meanwhile projected confidence, warning that, should the talks fail, his party "is not scared" of ending up in opposition or even facing fresh elections.

His party has also pledged to take any proposal for a left-right grand coalition to a party convention and to then let its 470,000 members vote on whether to enter another uneasy marriage or not.

In the exploratory talks on Friday at 1100 GMT, the CDU team is likely to include Merkel, Seehofer, Kauder and Finance Minister Wolfgang Schaeuble.

The SPD delegation would include its election candidate Peer Steinbrueck, who has said he will withdraw from top party ranks, as well as Gabriel, parliamentary leader Frank-Walter Steinmeier and North Rhine-Westphalia state premier Hannelore Kraft.

SPD secretary Andrea Nahles on Monday refused to be drawn on whether the party had any red-line demands, merely pointing to the SPD election manifesto, but vowed that it would not come out of the talks "with empty hands".

She dismissed as "private opinions" media reports on the SPD's negotiating positions, including a demand for six ministerial posts reported in newspaper the Frankfurter Allgemeine Sonntagszeitung.

Aside from its call for higher taxes to pay for welfare, pension and infrastructure outlays, the SPD in the election campaign also called for a national minimum wage to help the working poor.

The CDU, to keep all options open, is also expected to hold exploratory talks with the Greens party, raising the possibility of what in Germany's colour-coded politics would be a "black-green" government.

Such an alliance would have long seemed impossibly remote, bringing together the established conservative party with a group that emerged out of the 1970s anti-nuclear, peace and environmental movements.

However, Merkel after Japan's 2011 Fukushima disaster adopted the Greens' flagship demand of phasing out nuclear power, while the Greens have increasingly become a party of urban middle-class voters.

Amid the political manoeuvreing, President Joachim Gauck was due to meet leaders of all major parties in coming days at his Bellevue Palace in Berlin for individual talks on the political situation.

Munich daily the Sueddeutsche Zeitung reported that Gauck wanted to ask each of them how they assessed the political situation and how to prevent political paralysis in Europe's biggest economy.