A "grand coalition" might result in a somewhat greater emphasis on bolstering economic growth over the austerity that Germany has insisted on in exchange for bailing out economically weak European countries such as Greece.
During the election campaign, Merkel and Steinbrueck clashed over center-left calls for tax increases on high earners and a mandatory national minimum wage. Merkel rejected both ideas, arguing that they would hurt the economy.
All the same, a "grand coalition" is more likely to be to put together than a conservative-Green alliance, which would face wider cultural and political differences.
Green leader Juergen Trittin said of possible negotiations: "I don't think the probability of anything coming out of it is particularly high."True to her methodical style, Merkel said Sunday she would proceed "step by step" in working toward a new government. Still, she beamed earlier in the evening as she was greeted by a cheering crowd chanting "Angie! Angie! Angie!" at her party's headquarters. Merkel pledged that "we will do everything together in the next four years to make them successful years for Germany." A new anti-euro party, Alternative for Germany, came close to winning the 5 percent support needed to win seats in Parliament on Sunday. The party, which advocates an "orderly breakup" of the eurozone and appeared to have a wider appeal to protest voters on the right, finished with 4.7 percent. Its leader, Bernd Lucke, said it had "taught the other parties to be scared" and "strengthened democracy in Germany." Merkel has pursued a hard-nosed course in the euro crisis, insisting on spending cuts and economic reforms in exchange for bailout struggling countries such as Greece. The bailouts haven't been popular, but Germany has largely escaped the economic fallout from the crisis, and Merkel has won credit for that. Europe played only a very limited role in the campaign.