Despite bright sunshine in large parts of the country, fewer Germans turned out to cast their ballots than at the last election, according to the electoral commissioner. By 12 pm GMT, 36.1 percent of voters had cast their ballots, down from 41.9 percent at the same time in 2005.

In total, 62.2 million Germans are entitled to vote for 28 parties seeking to enter the lower house of parliament, or Bundestag.

Preliminary exit poll results are expected around 4 pm GMT. Security has been tightened throughout the country on election day in the wake of a series of warnings by Islamic militants, including one from al Qaeda leader Osama bin Laden. The messages call on Germany to pull some 4,200 troops out of Afghanistan.

Merkel the clear favorite

Chancellor Angela Merkel remains the clear favorite to win a second term in power. But it's unclear whether she will get the center-right government she says is needed to lift Europe's largest economy out of its worst slump in 60 years.

Merkel's conservatives have been in an awkward "grand coalition" with the Social Democrats (SPD) for the past four years.

Merkel's main rival in Sunday's vote is the leader of the SPD and current foreign minister, Frank-Walter Steinmeier.

The chancellor enjoys high popularity ratings, and opinion polls in recent weeks have given her Christian Democratic Union (CDU) a 8-11 point advantage over their center-left rivals. The conservatives' preferred coalition partner is the reform-minded business-friendly Free Democratic Party (FDP).

Should the conservatives, however, fail to win enough support to team up with the FDP, Merkel will probably be forced into the same uneasy right-left partnership she has presided over since 2005.

Both candidates remain optimistic

Latest opinion polls show that a continuation of the "grand coalition" could be a likely outcome. Merkel's lead has shrunk in recent weeks. A poll by the Forsa institute published two days before the vote showed her preferred coalition at 47 percent - not necessarily enough to clinch a clear majority under Germany's complex electoral system.

But Merkel remained upbeat on the eve of the election. "I am always optimistic," she told mass-circulation newspaper Bild am Sonntag.

"Voters will decide tomorrow how quickly we get out of this crisis," Merkel told a final rally on Saturday. "We are fighting for the German jobs of the future."

Steinmeier, Merkel's rival for the top job, also sounded confident despite a risk that his party could score under the post-war low of 28.8 percent it received in 1953.

"I've felt a great amount of support and a lot of interest in our cause. And that's why I'm very, very confident about today," Steinmeier told reporters after he cast his vote in Berlin on Sunday.

sp/reuters/dpa/ap

Editor: Toma Tasovac