One day before a new round of top-level exploratory talks between Chancellor Gerhard Schröder's Social Democrats (SPD) and Angela Merkel's conservative Christian Union alliance on forming a governing coalition, leading figures in the two blocs said they were finding common ground.

Bavarian premier Edmund Stoiber, one of Germany's most powerful conservative regional leaders, offered a vote of confidence in a grand coalition by saying he hoped to join such a government as a cabinet member.

"First the Union and the SPD must agree on a stable government with a reasonable program," Stoiber told the mass-selling Bild newspaper. "Then I could imagine assuming responsibility in such a cabinet."

Economy Minister Wolfgang Clement of the Social Democrats told ARD public television that his party would work with the conservatives on outlining fiscal and labor market policies to tackle the mounting public debt and 11.4-percent jobless rate.

He said those problems took priority over the "personnel" issue -- who would win the chancellery.

CDU insists on Merkel

The Sept. 18 election left Germany at a political impasse after voters failed to give either of the main blocs a ruling majority.

The Christian Union won a three-seat lead over the Social Democrats but the narrow result left both Merkel and Schröder claiming a mandate to be Germany's next leader.

Merkel said Monday that the Social Democrats would have to accept the Christian Union's right to choose the chancellor before coalition negotiations could begin.

SPD leaders continued to resist, saying that they would enter the talks with the aim of seeing Schroeder confirmed for a third term.

Will Schröder budge?

But some Social Democrats cautiously hinted that Schröder could bow out in the interest of an agreement with the conservatives.

"If he (Schröder) for some reason said, 'I agree with what is coming together and perhaps someone needs to budge on the personnel issue', then we would accept that," the deputy head of the SPD parliamentary group, Gernot Erler, told ARD.

Analysts predicted the first real movement on the tentative negotiations next week, after a district in the eastern city of Dresden casts its ballots in the general election. The poll was postponed for two weeks because of the death of a candidate.

Schröder's strategy of clinging to power was seen largely as a bluff aimed at strengthening his party's position ahead of what is sure to be intense horse-trading.

"A few days after the election in Dresden, Schröder can say, 'In the interest of the country, in the interest of the common good, I'll clear the way for Merkel'," political scientist Peter Lösche of the University of Göttingen told rolling news channel N24.