* Merkel's conservatives eye strongest result since 1990
* Chancellor has chance of absolute majority
* Slim majority could make third term difficult
By Stephen Brown and Noah Barkin
BERLIN, Sept 22 Angela Merkel won a landslide
personal victory in Germany's general election on Sunday, but
her conservatives appeared just short of the votes needed to
rule on their own and may have to convince leftist rivals to
join a coalition government.
Partial results put support for Merkel's conservative bloc
on 42 percent, their strongest score since 1990, the year of
German unification, and a ringing endorsement of her steady
leadership during the euro zone crisis.
The outcome left the centre-right chancellor tantalisingly
close to an absolute majority in the Bundestag lower house of
parliament, a feat achieved only once in 1957 by Konrad
Adenauer, the father of the West German federal republic.
"This is a super result," Merkel told cheering supporters.
"Together, we will do all we can to make the next four years
successful ones for Germany."
If she were to rule alone, which looks unlikely, she would
have to do so with a tiny majority, leaving her vulnerable to
rebel eurosceptics in her Christian Democratic Union (CDU) and
its sister party, the Bavarian Christian Social Union (CSU).
The alternative could be to revive a 'grand coalition' with
the centre-left Social Democrats (SPD), who came a distant
second with 25.5 percent, their second worst result in the
post-war era. Former finance minister Peer Steinbrueck's
gaffe-prone campaign never gained traction against the popular
Polls show that the consensus-driven German public would
welcome a right-left partnership, as would Berlin's European
partners, who hope the SPD might soften Merkel's
austerity-focused approach to struggling euro zone members.
But after alienating millions of their own supporters when
they partnered Merkel in her first term between 2005 and 2009,
the Social Democrats are wary of a sequel.
"We won't automatically go into a grand coalition," said SPD
Chairman Sigmar Gabriel. "What is important are the policies."
DOWN TO EARTH
There was bitter disappointment for Merkel's allies in the
outgoing government, the market-friendly Free Democrats (FDP),
who suffered a humiliating exit from the Bundestag, the first
time they will be absent from the chamber in the post-war era.
The Alternative for Germany (AfD), a new eurosceptic party
that had threatened to spoil Merkel's victory by breaking into
parliament for the first time, appeared to have come up just
short of the 5 percent threshold required to win seats.
The young movement's hostility to euro zone bailouts and
call to cut weaker southern members loose from the currency area
resonated with many crisis-weary voters and may act as a brake
on Merkel's conduct of European policy.
The radical Left party was set to be the third biggest force
with about 8.5 percent, just ahead of the environmentalist
Greens, who shed votes to finish near 8 percent.
Merkel, the daughter of a Protestant pastor who grew up
behind the Iron curtain in East Germany, is the third post-war
chancellor to win three elections, after Adenauer and her mentor
She is one of the few European leaders to survive the debt
crisis, which has seen 19 of her EU peers lose their jobs since
the start of 2010.
At CDU headquarters in Berlin, supporters wearing "Angie"
t-shirts in the party's orange campaign colours, jumped up and
down waving German flags and singing along to the song "Days
Like These" by German punk band Die Toten Hosen.
Merkel, whose modest leadership style has given her
popularity ratings that other politicians can only dream of,
clapped awkwardly to the song.
"People I wouldn't expect to vote CDU did so because of
Merkel. Her down-to-earth, honest and calm style convinces
German voters," said Johann Schulz-Gebeltzig, a 24-year-old CDU
Despite the resounding victory, Merkel's third term won't be
Were she to try to rule alone, she would have trouble
pushing legislation through parliament, especially an upper
house dominated by left-leaning parties like the SPD and Greens.
"Given the challenges that lie ahead for Germany, a broader
majority would be good for Germany and Europe," said ING
economist Carsten Brzeski.
Yet a 'grand coalition' would also have its pitfalls.
Negotiations with the SPD could last months and Merkel might
have to cede key cabinet posts, like the finance ministry, and
accept SPD policies, such as a minimum wage and higher taxes for
top earners, that she has opposed during the campaign.
If the Social Democrats decline to serve under her again,
Merkel could turn to the Greens, though such an alliance would
likely be even more fraught.
Regardless of what government she ends up with, the
chancellor faces major challenges in a new term, from bedding
down her complex shift from nuclear to renewable energy, setting
out a vision for a euro zone plagued by recession and high
unemployment, and warding off a looming demographic crisis.
"If she had to give in to SPD demands for a minimum wage and
other labour market regulations, Germany's extraordinary jobs
miracle could start to peter out in a few years," said economist
Holger Schmieding of Berenberg Bank.
French President Francois Hollande, a Socialist who had
hoped for a strong SPD showing, was swift to congratulate Merkel
on her victory in a telephone call and invite her to Paris once
a new government is formed, the French presidency said.
One of Merkel's key CDU ministers pledged that Berlin would
do its share to help pull the euro zone out of crisis.
"We will remain reliable in the role of stability anchor and
growth locomotive. We will keep Europe together," said Finance
Minister Wolfgang Schaeuble, who has played an influential role
in Germany's management of the euro zone debt crisis.