German Chancellor Angela Merkel's conservatives and the Social Democrats (SPD) agreed on Thursday to enter into formal talks on forming a coalition to govern Europe's largest economy for the next four years.

The German news agency dpa quoted SPD chief Sigmar Gabriel on Thursday as saying the leadership of the party would recommend to members this weekend that it enter into formal coalition talks with Merkel's Union bloc.

The head of the Christian Social Union, Horst Seehofer, told re...