Angela Merkel is continuing crisis talks to form a coalition to save her 12-year rule this morning after marathon discussions failed because of 'serious differences' between the sides.

The parties aimed to wrap up the talks last night but did not reach an agreement after haggling for 15 hours, with disagreements focused on migration numbers and the environment.

The Christian Democrats leader is trying to form an untested alliance with the pro-business Free Democrats (FDP) and the environmentalist Greens - with snap elections likely if no agreement can be reached.

Merkel, 63, was left badly weakened by the inconclusive election last month, which saw the far-right Alternative for Germany (AfD) lure millions of her voters, leading to fears another poll could help consolidate their support.

Talks between the 'Jamaica coalition', so called because each party's colours match the Caribbean island's flag, started at 11am today, seven hours after they drew to a close in the early hours.

Angela Merkel, arrives for exploratory talks in Berlin on a coalition between the CDU, the Christian Social Union (CSU), the German Liberal Party (FDP) on Friday morning

The parties aimed to wrap up the talks last night but did not reach an agreement after haggling for 15 hours, with disagreements said to be focused on migration caps and the environment

The level of disagreement between the three parties involved in the coalition negotiations means talks could continue all weekend, if not longer.

The chancellor is under pressure from her own conservative bloc, particularly the Bavarian CSU sister party, to hold the line on key issues in the talks, especially on migration.

The CSU, worried about losing further ground in a 2018 state election, wants to cap the number of people Germany will accept per year on humanitarian grounds at 200,000, a limit the environmental Greens reject as unconstitutional.

The Greens and CSU are also at odds over the issue of family reunion - the ability of refugees already living in Germany to bring in immediate relatives.

Merkel last night appealed to party leaders to 'put themselves in each other's shoes before going back to the negotiating table.

But it was clear the discussions were running into difficulty, with Senior FDP official Alexander Lambsdorff writing on Twitter about 'serious faces'.

'We decided jointly that we should use the coming days to overcome the differences that still exist,' said the Free Democrats' leader, Christian Lindner.

'We will use this weekend to achieve a good solution,' Merkel's chief of staff, Peter Altmaier, told ARD television. 'I think the problems can be solved,' he said.

The Greens and the CSU even accused each other of blocking an agreement.

German Chancellor Angela Merkel, also leader of the conservative Christian Democratic Union (CDU) party, arrives for talks with members of potential coalition parties on Thursday

Trying to find a new Angela: German Chancellor Angela Merkel, pictured with French president Emanuel Macron yesterday, has to agree with her coalition partners to start negotiations today or Germany faces a snap election

Merkel tried to break the logjam on climate by offering to reduce coal power generating capacity by 7 gigawatts (GW), sources familiar with the talks said.

That is still shy of the 10 GW cut demanded by the Greens, but up from the earlier offer of 5 GW.

'We have very, very different positions,' she told reporters earlier on Thursday. 'If it works - I think it can work - there can be a positive result at the end of today's negotiations. But this is a difficult task.

'I expect the negotiations will go on for hours ... I am ready to make my contribution.'

On Friday, the leader of Merkel's party in parliament indicated she would me willing to make further concessions on reducing coal emissions to placate the Greens.

Volker Kauder said: 'Despite the big stumbling blocks I believe it could work. I feel readiness by all sides and everyone has to make concessions.

'And I believe that the exploratory talks must end this weekend.'

Talks over the past few weeks have been quarrelsome, as the parties are far apart on the political spectrum and differ on everything from refugees to climate protection and EU reforms.

Merkel, eyeing a fourth term as chancellor, gave the coalition hopefuls until November 16 to reach an agreement in principle, with the goal of having a new government in place by Christmas.

'If the conservatives, the Greens and the FDP can't pull together, there's no way to avoid new elections,' Der Spiegel news weekly wrote.

'No one wants that. But is that enough to justify an alliance?'

Yes we Jamaican: The coalition, named a 'Jamaica coalition' because the parties' colours match those of the Jamaican flag, are still disagreeing on several issues, namely immigration

The Greens will likely dig in their heels after already watering down key campaign pledges to unblock contentious talks on the environment.

Greens leader Cem Ozdemir abandoned demands for a 2030 end date for coal-fired plants and the internal combustion engine, and called on other parties to also show some flexibility.

'You build bridges together or not at all,' he told the Bild newspaper.

But his proposals to make polluting diesel cars less attractive and close the country's 20 dirtiest coal plants have met with resistance from the conservatives and the FDP, who worry about job losses and disrupting the mighty auto and energy sectors.

On the eve of the talks deadline, the sniping and mud-slinging continued to play out in the media with the CSU's outspoken negotiator Alexander Dobrindt accusing the Greens of 'clinging to ancient demands'.

The Greens' political director Michael Kellner hit back at the CSU's 'irresponsible' behaviour.

'The only conclusion to draw from Dobrindt's daily insults is that he wants the talks to fail,' Kellner complained.

Despite the rifts on display, the parties have been able to reach some broad agreements in recent weeks.

At a time when the state coffers are bulging, they have committed to maintaining Germany's cherished balanced budget.

They have also agreed to improve the nation's outdated internet infrastructure, invest more in education and increase child benefits.

The parties, who are broadly pro-EU, also made some headway on Europe after the liberal Free Democrats dropped their demand to wind down the eurozone's bailout fund.

Should a Jamaica government emerge, French President Emmanuel Macron could find in Merkel a willing and much-needed co-pilot in his ambitious drive to reform the bloc - although his plans for a eurozone budget and finance minister will still prove divisive in Berlin.

As the clock ticks down towards the crunch deadline, commentators say all sides will want to avoid triggering snap polls that could end up bolstering the AfD.

Surveys suggest there is little appetite for a return to the ballot box, and some two-thirds of voters say they expect the coalition negotiations to succeed.

The stakes are especially high for Merkel, Europe's most powerful woman, who is still smarting from the bruising she received over her decision to allow over a million asylum seekers into the country.

'Nobody needs an agreement more than Merkel. After all, she's the one who wants to be re-elected chancellor,' the Sueddeutsche Zeitung daily wrote.