Germany's Schulz under pressure to enter coalition talks

Steinmeier has been meeting party leaders following the collapse of coalition talks on Sunday between Merkel's political bloc, the pro-business Free Democrats and the Greens.

Merkel said she would prefer snap elections than leading a minority government following the Free Democrats walkout from coalition talks on Sunday night.

Schulz, who ran against Merkel in the general elections, first ruled out re-entering a grand-coalition with Merkel's CDU/CSU that left the SPD with its worst election result since the second world war.

The SPD initially wanted to return to opposition and try to rebuild its base.

"We do not want 'Austrian' conditions," SPD politician, Thorsten Schafer-Gumbel told ZDF. He said a minority government is possible, despite Merkel's reservations.

The SPD wanted to avoid a scenario where – as in Austria – a protracted Grand Coalition among the main parties leave them without strong characters of their own, and leads to the strengthening of political fringe parties.

The Grand Coalition has ruled Germany since the 2013 elections, as it did during Merkel's first term in office between 2005 and 2009.

But the pressure is growing on Schulz to end the political impasse that also puts eurozone and other EU reforms on hold.

New elections could also come too early for the SPD after the bruising results just a few weeks ago that left the party marred by infighting.

A poll on Wednesday put the SPD on 19.5 percent, already one point below its result in the September elections.

"I don't see any article in the constitution that stipulates there must be fresh elections if the leader of the FDP breaks off coalition talks," Achim Post, head of the SPD group in the North Rhine-Westphalia, was quoted in the Der Spiegel magazine.

"New elections are not the right way to go," Germany's Suddeutsche Zeitung quoted SPD member Martin Rabanus.

The CDU is also courting the Social Democrats with offers such as pension reform.

Monday's decision by the SPD to rule out coalition talks now seems hasty, putting Schulz's leadership – who is up for re-election as head of the party on 7 December – in jeopardy.

Fresh elections would also raise the issue of Schulz's longer term future, as the SPD would likely choose another lead candidate. A Grand Coalition could be the way for Schulz to survive for now.

"The SPD is fully aware of its responsibility in the current difficult situation," Schulz told DPA news wire before meeting with Steinmeier on Thursday.

"I am sure that we will find a good solution for our country in the coming days and weeks," he added.