BERLIN (Reuters) - Chancellor Angela Merkel piled pressure on Monday on the Social Democrats (SPD) to rejoin a “grand coalition” with her conservatives, arguing that the European Union and the wider world urgently needed a stable German government in place.

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More than two months after its Sept. 24 national election, Europe’s economic and political powerhouse is still without a government and officials say coalition talks may now properly begin only in the new year.

“There are European elections in 2019... so there is a big expectation that we take positions,” she told reporters, referring to proposals by European Commission President Jean-Claude Juncker and by French President Emmanuel Macron on the future governance of the EU’s currency and economic union.

Merkel also cited conflicts in the Middle East, tensions with Russia and relations with the United States as factors that required a Germany “capable of acting”.

David McAllister, an executive committee member of Merkel’s Christian Democrats (CDU), echoed her views in comments to Reuters, adding that Germany needed to iron out its stance on key EU issues ahead of European Parliament elections in 2019.

“Diligence definitely comes before speed (in forming a coalition) but the government should be formed in time for Germany to be capable of acting if decisions need to be made (in Europe) in 2018,” McAllister said.

The conservatives should signal willingness to compromise and avoid drawing red lines as they prepare for talks with the SPD, he said. Preliminary talks are due to begin on Thursday.

While the conservatives and SPD have different opinions on Europe, they managed to work together in a 2013-2017 governing coalition and all major parties in Germany agree on fundamental issues relating to the EU, McAllister added.

Merkel’s initial efforts to forge a three-way coalition with the liberals and the Greens collapsed on Nov. 19, forcing her to approach the SPD, which had wanted to go into opposition after suffering its worst election result in German postwar history.

SPD RELUCTANCE

SPD leader Martin Schulz, who has previously been strongly opposed to another “grand coalition”, said on Monday he ruled nothing out ahead of the preliminary talks.

Stung by their previous experience of serving as junior partner in Merkel-led governments - in 2005-09 and again in 2013-17 - the SPD rank-and-file membership shares Schulz’s reticence about joining a new coalition.

Many SPD members favor a looser arrangement whereby the SPD agrees to tolerate a Merkel-led minority government, supporting or at least agreeing not to vote against certain measures.

A poll for RTL and NTV television showed 48 percent of SPD members were in favor of toleration, an inherently less stable form of government, and only 36 percent in favor of a renewed grand coalition.

Merkel herself has said she would prefer a fresh election to presiding over a minority government.

Schulz has promised to allow SPD members a vote on any deal his party reaches with Merkel.