Germany's centre-left Social Democrats (SPD) said on Sunday they were ready to move to three-way coalition talks with the Greens and Free Democrats (FDP), but the two smaller parties kept open the option of an alternative tie-up with the conservatives.
A close result in last Sunday's election, when no party won an overall majority, has kicked off a round of coalition talks that could last months, with the SPD and conservatives both courting the FDP and Greens with the aim of securing power.
Polls show voters favour the SPD, who narrowly won the election, leading a coalition with the business-friendly FDP and the ecologist Greens.
"The SPD is now ready for three-way talks," the party's general secretary, Lars Klingbeil, said after talks on Sunday with both the FDP and Greens.
The FDP, however, is closer to Chancellor Angela Merkel's conservatives and the two centre-right groups also held talks.
"We have had a constructive discussion and have few hurdles in terms of content," FDP General Secretary Volker Wissing said after his party met a team from the CDU/CSU conservative bloc.
The conservatives were eager to pursue the talks, despite slumping to a record low result in the national election.
Markus Blume, general secretary of the Bavarian Christian Social Union (CSU), Bavarian sister party to Merkel's Christian Democrats (CDU), said the talks with the FDP left the conservative bloc "eager for more".
The Greens would prefer themselves and the FDP, who are from opposite ends of the political spectrum and at odds on a range of issues, to team up with the SPD. Earlier, Wissing said the FDP and SPD faced hurdles to an alliance.
The outcome of Sunday's talks, which all sides said were constructive, raises the stakes for talks on Tuesday between the conservatives and the Greens. Greens co-leader Annalena Baerbock said they would decide how to proceed after that meeting.
Merkel, in power since 2005, plans to step down once a new government is formed and will stay on until that point.
(Reporting by Paul Carrel and Maria Sheahan; Editing by Andrew Heavens, Philippa Fletcher and Daniel Wallis)
