Conservatives in the German state of Bavaria strongly backed their regional Leader Edmund Stoiber on Tuesday to face Chancellor Gerhard Schröder in this year's election, deepening a rift with the main opposition CDU.

Stoiber, leader of the Christian Social Union, the CDU's Bavarian sister party, said he wanted to avoid a row by reaching an amicable agreement with rival Angela Merkel, leader of the far larger Christian Democrat (CDU) party, who also wants to take on the Chancellor Schroeder. "Mrs Merkel and I will have to discuss this between ourselves. I'm sure we'll come to an acceptable agreement," he said during an annual party meeting in the Alpine resort of Kreuth.

Traditionally it has always been the CDU which puts forward its leader as the conservative candidate for chancellor, but many in the party regard Merkel as the weaker leader.

CSU General Secretary Thomas Goppel said his party would give unqualified support to Stoiber. "The whole CSU backs the candidature of party chairman Edmund Stoiber. It's the duty of the party to back such a good candidate," he told Reuters.

Opinion polls indicate Stoiber as better placed than Merkel to beat Schröder mainly because of his track record in ruling his wealthy southern state.

Lederhosen and Laptop

While the rest of Germany appears to be struggling to keep on going, Bavaria's economy is purring like a high-performance engine.

Around 30,000 high-tech and media firms have located in the "Isar Valley" area around Munich. Companies such as Apple and Microsoft have moved their German headquarters there, prompting the tease that Stoiber has matched lederhosen with laptop. And Munich’s suburbs host Europe's biggest biotechnology site, with research and development facilities.

In addition, Bavaria is home to some of the world's top industrial brands. Car manufacturer BMW AG is headquartered just outside Munich, as well as electronics giant Siemens AG, not to mention Allianz AG, one of the world's biggest financial groups.

Unemployment in Bavaria is runnning at around 5.2 per cent, lower than the national 9.6 per cent, while state debt is the lowest of the 16 German states.

Moreover, Bavaria is one of Germany's top tourist destinations with over 100 million visitor nights booked in hotels per year. The state's crime rate is the second lowest in Germany.

Stoiber hopes his success in Bavaria will enable him to unseat Chancellor Gerhard Schroeder, under whom Germany is nearing recession.

First woman leader

Stoiber’s opponent in the chancellor candidate race is Angela Merkel, an east German who is the first woman to lead a major political party in Germany. Stoiber takes a hard line on controlling immigration and he has pledged to stick to this at national level if elected.

She has a strong following in eastern Germany and among women and is seen as more moderate than the populist Stoiber.

A battle for the candidacy could further divide the conservatives, weakening its chances of beating Schröder in the upcoming .

Pollsters say the public is getting tired of the conservatives' inability to agree on a champion.

The conservatives, who have been fighting for two years to recover in the polls since a party funding scandal broke around ex-chancellor Helmut Kohl, have said they will pick their candidate by January 22 .

Friedrich Merz, head of the Christian Democrats' parliamentary group, told German radio a deal should be reached this month. If not, the conservatives risked becoming a figure of fun in the February carnival season, he said.