* Merkel's allies regain absolute majority lost in 2008
* CSU's success boosts chancellor for German vote
* FDP coalition partners ejected from assembly
By Christiaan Hetzner
MUNICH, Sept 15 Angela Merkel's allies swept to victory in a state election in Bavaria on Sunday, regaining the absolute assembly majority they lost in 2008 and providing a show of conservative strength for the chancellor a week before Germany goes to the polls.
The Christian Social Union (CSU), sister party of Merkel's Christian Democrats (CDU), won 49 percent according to TV projections, putting them back more firmly in the saddle of the prosperous southern state they have governed for 56 years.
But the Bavarian ballot also delivered a worrying message for Merkel, as the pro-business Free Democrats (FDP), with whom she governs Germany in a centre-right coalition, slumped to just 3 percent, below the 5 percent level needed for assembly seats.
"The CSU is a people's party and we are deeply rooted in the Bavarian population. Every second Bavarian voted for us," state premier Horst Seehofer told elated supporters - fulfilling a pledge to Merkel that his party would help set an upbeat tone for the national poll on Sept. 22.
The FDP sought to put a brave face on Sunday's disastrous result, which thwarted recent upward momentum for the party.
"This is a heavy defeat... but our response now is: let's get going ... Bavaria is different. Now it is about Germany," said party leader Philipp Roesler, calling it a "wake-up call".
Merkel, whose conservative bloc stands at around 40 percent, needs the FDP to do well in the federal vote to avoid having to turn to the opposition Social Democrats (SPD), with whom she governed in her first term from 2005-2009. The FDP stands at around 5 percent nationally.
"Voters like winners. Such a strong signal from Bavaria will mobilise Merkel's supporters. On the other hand, such a bad result for the FDP could activate their voters," said Thomas Jaeger, political scientist at Cologne University.
Its poor showing in Bavaria might scare conservatives into giving their second vote to the FDP, potentially weakening the share of votes for Merkel's CDU. Germans pick a constituency candidate with their first vote, and the second vote determines the relative strength of the parties in the Bundestag.
Senior CDU lawmakers moved quickly on Sunday to dissuade conservatives from splitting their vote next week. "The second vote is the 'Merkel vote', and we want it for our party," said CDU General Secretary Hermann Groehe.
A new anti-euro party, the Alternative fuer Deutschland, (AfD) which may yet upset Merkel's coalition hopes and scrape into parliament, did not stand in Bavaria, which has its own Eurosceptic party the Freie Waehler.
Projections put the SPD on 21 percent in Bavaria, behind their national standing of around 26 percent, and their Greens partners on 8 percent. The Freie Waehler polled 9 percent, making them the third strongest party.
Bavaria is home to 12.5 million of Germany's 80.5 million people and if it were a country, it would have the euro zone's sixth largest population and economy. The state cherishes its strong regional identity and is fiercely proud of its careful state spending and "laptop and lederhosen" economy.
It is the only state with a regional party in the federal parliament, because when other regional conservative parties joined to form the CDU, the CSU chose to remain separate. CSU lawmakers make up nearly a quarter of Merkel's bloc.
The party was dealt a blow in 2008's regional election when it slumped to 43 percent, forcing it into a union with the FDP.