Wednesday's 88-minute meeting in Berlin was only the first step in what is likely to be a long and laborious process to iron out major differences before forming a new "grand coalition" government in Germany.

The mood was upbeat following the gathering, which involved 75 leading figures from Merkel's Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU) under Horst Seehofer, and the Social Democrats (SPD) led by Sigmar Gabriel.

"It was a good start," Hermann Gröhe, the CDU general secretary said following the talks, adding that there was a perceptible will on the part of all parties to bring the negotiations to a successful conclusion.

CSU general secretary Alexander Dobrindt saw tangible signs of this good will in the fact that participants "hugged each other at first and that was very helpful."

His counterpart from the SPD, Andrea Nahles, struck a more sober note, saying that there was "much to do, and we now have to tackle that together."

Some stumbling blocks

Among the major issues that need to be cleared up before the parties join in a functioning coalition is that of a statutory minimum wage. The SPD has made the introduction of a minimum wage of 8.50 euros an hour ($11.70) a key condition for joining the coalition under Merkel. Merkel and her conservative oppose this move, saying it will mean fewer jobs.

The SPD also wants to see higher taxes for the wealthy, which Merkel's bloc also firmly opposes. The CSU's call for the introduction of a special freeway toll for foreign-owned cars is likely to prove another sticking point.

However, it is expected that these difficult issues will be discussed only later in the negotiation process to allow agreement to be reached first in less controversial areas.

Officials said Wednesday's talks were focused on the labor market and Germany's public finances. The next round of talks, scheduled to take place on October 30, is to concentrate on European affairs.

Before then, 12 working groups and four subgroups set up by the parties will endeavor to establish more common ground.

The negotiations could theoretically last until December 17, when the German parliament, or Bundestag, is due to formally elect Merkel as chancellor of a new ruling coalition.

A coalition has been made necessary by the fact that Merkel's conservative bloc fell short of an absolute majority by a handful of seats in last month's election, while her former junior coalition partner, the business-friendly Free Democrats (FDP), failed to clear the five-percent hurdle for parliamentary representation.

Merkel already led a "grand coalition" from 2005 to 2009.

tj/rc (dpa, Reuters)