The two leaders and senior aides at an earlier meeting on Wednesday made progress toward a new government that would end the standoff that arose when neither side won a majority in parliament in the 18 September national election.

Neither Merkel nor Schroeder, however, has yet withdrawn claims to be chancellor.

Haggling

Setting the scene for a prolonged round of haggling, Merkel said she had told conservative leaders that "there will be more decisions at a summit and that results from this talks should not be expected before Sunday evening, but we have convened our (leadership) bodies again for Monday."

Gerhard Schroeder is unwilling
to back down

Merkel was to meet on Thursday evening with Schroeder, Social Democratic chairman Franz Muentefering and her fellow conservative leader, Edmund Stoiber.

She stuck firmly to her demand that Schroeder's Social Democrats recognise her claim to be chancellor as the leader of the strongest group in parliament.

"We have always said that, to start (formal) coalition negotiations, a further condition must be fulfilled - a basis of trust must be created," Merkel told reporters. "This basis of trust can only be created if certain rules are respected."

Speculation

She also insisted that her conservative bloc should get the job of parliament president, which traditionally goes to the strongest parliamentary group. The post has featured in speculation over how Schroeder's party could be persuaded to back down.

Merkel's Christian Democrats and their Bavaria-only sister party, the Christian Social Union, are exploring whether they can form a majority coalition with Schroeder's Social Democrats.

The conservatives have 226 seats in parliament to 222 for the Social Democrats; 308 are needed to form a government.