German Chancellor Gerhard Schroeder will meet leader of the Christian Democratic Union (CDU) Angela Merkel on Wednesday for a second round of exploratory talks on forming a grand coalition government.

The CDU and Schroeder's Social Democratic Party (SPD) held their first round of exploratory talks on Thursday, but reached no consensus on who should lead the country.

The two largest parties were forced to discuss the possibility of power-sharing as neither the SPD nor the CDU/CSU won a majority needed to set up a new government in the Sept. 18 elections.

Who should be chancellor has been the key dispute blocking the way to forge a deal on governing together since both Schroeder and Merkel claim they are mandated to be the new chancellor.

On Tuesday, Schroeder spoke out confidence that the two parties would strike an agreement on a grand coalition government to end the political uncertainty.

Speaking at a function on the future of the European Union in Strasbourg, France, Schroeder noted that German voters had voted for the renewal of their country without sacrificing "social cohesion."

"This requires a government that makes this its priority and I am very sure that such a government will emerge in the form of a grand coalition," Schroeder added.

Before Wednesday's meeting, some German newspapers said the SPD was relaxing its earlier position that Schroeder should be chancellor.

The Sueddeutsche Zeitung daily, citing SPD party sources, said in its Wednesday edition that the SPD was considering serving as a junior coalition partner in a grand coalition government, on condition that Merkel would not be chancellor candidate.

But in an interview with the Sueddeutsche Zeitung daily published also on Wednesday, CDU General Secretary Volker Kauder reaffirmed that there would be no coalition talks "without it being clear in advance that Frau Merkel will be chancellor."

Merkel has been declining to hold serious talks with the SPD unless Schroeder gives up claiming to lead.

On Sunday, Schroeder told the German TV ARD that his party and the CDU/CSU should set up a coalition first and then discuss the chancellorship, adding he would do everything to ensure the formation of a grand coalition.

His remarks were interpreted as softening his claim to the chancellorship.

Source: Xinhua