The "Frankfurter Allgemeine" (FAZ) newspaper quoted sources in the center-left Social Democratic (SPD) party alleging that Schulz would replace Foreign Minister Frank-Walter Steinmeier and then run as its chancellor candidate in Germany's 2017 federal election.

On Wednesday, Chancellor Angela Merkel confirmed that SPD stalwart Steinmeier was her three-way coalition's joint nominee for German president, a ceremonial post but with sigificant moral clout. A decision is to be taken via a special assembly on February 12.

Merkel herself is expected this weekend to broach speculation that she will run for a fourth chancellery term as joint candidate for her Christian Democratic (CDU) party and its allied Bavarian Christian Social Union (CSU).

Schulz 'happy' in Brussels

SPD sources said Schulz, in talks with SPD leader and Vice-Chancellor Sigmar Gabriel on Tuesday, had balked at the prospect of a shift from Brussels to Berlin, insisting that he also become SPD candidate who could end up challenging Merkel.

That portrayal was described as "complete nonsense," by a spokesman for Schulz. Gabriel's office also dismissed such reports.

The German news agency DPA reported Thursday that Gabriel had offered Schulz the Foreign Office post up until the Bundestag federal election due in September.

FAZ said Schulz regarded this offer as insufficient. Only with the chancellery option as well would he be able to establish a large power base.

Simultaneously in Brussels, Schulz is campaigning for another term as European Parliament president, although routinely it should go to a conservative in January.

Should Gabriel allow Schulz to press for the chancellery it would be a repeat of his opting for the backstage in 2013 when Peer Steinbrück ran for the SPD.

SPD party pressure

DPA said Gabriel's inner-party critics had long insisted that Schulz become the SPD's top election candidate, citing the 27.3 percent garnered by the SPD in 2014 when Schulz was leading candidate in the European Parliament election.

Schulz, 60, a trained book retailer from the Aachen region on Germany's triangular border with the Netherlands and Belgium, has spoken out against far-right trends as European Parliament president.

On Thursday, Schulz warned at an economic forum in Berlin - hosted by the "Süddeutsche Zeitung" newspaper - that Europe, as an open society with its joint EU treaties, faced severe pressures.

"We are all sensing it," Schulz said, referring to what he termed a dangerous mix of unscrupulous "rat-catchers" and enraged individuals who intimidated and ridiculed "elected representatives from the communal level up to Federal President."

Necessary was personal standing and a clearly defined limit, he said, added that he was determined to defend "a liberal and tolerant society."

Politicians must develop answers to urgent questions that had left many people feeling bewildered and fearful, he said.

Especially important for Europe's inner harmony was that unjust societal gaps be closed, for example, by tackling tax havens used by the wealthy and concerns.

iipj/kl (Reuters, dpa)