* Steinbrueck kicks off campaign with "straight talk" rally
* Social Democrat attacks Merkel as "do-nothing" leader
* Appeal to left-wing voters targets banks, high earners
By Erik Kirschbaum
HAMBURG, Aug 8 Launching the final phase of his long-shot campaign to oust German Chancellor Angela Merkel, leftist challenger Peer Steinbrueck called on Thursday for higher taxes on the wealthy and tighter rules for "gambling" bankers.
Analysts and pollsters see no chance of Steinbrueck's Social Democrats (SPD) catching Merkel's conservatives, who have a 15 point lead in opinion polls six weeks before the Sept. 22 election.
But Steinbruck is hoping he and his Greens allies, who together are polling around 38 percent, can catch Merkel's centre-right alliance, currently on 45 percent, or at the very least deny them a parliamentary majority.
To do that, he knows he needs to lure back many of the 10 million, mostly ordinary working class voters, who abandoned the SPD since 1998, disillusioned with its pro-business economic policies that squeezed low incomes.
So Steinbrueck, who was finance minister in Merkel's "grand coalition" government between 2005 and 2009, has lurched to the left in the campaign.
On Thursday, he held a townhall-style meeting in the northern port city of Hamburg. Under a giant tent, a couple thousand people got the chance to ask the 66-year-old candidate questions, a format the tightly-controlled Merkel campaign is expected to avoid.
"I'm not going to hold a long boring hour-long speech up on a stage talking down to you and then leave without anyone getting the chance to ask questions," Steinbrueck said at the first of 28 "Straight Talk" rallies before the vote.
His feisty attacks on Merkel as a "do-nothing" leader who has "lulled the country asleep" went down especially well.
"Can anyone think of anything she's done for Germany that will leave a lasting impression? She's selling German short. This standstill of hers is endangering the country's future."
Steinbrueck promised to introduce rent controls, to raise taxes and use those funds for education and infrastructure.
"Some say you can't talk about raising taxes in an election campaign, but I say that's the honest way to go - it's straight talk," he said, drawing laughs and cheers from the crowd at the reference to the title of his rally.
But then he pointed out that only married couples earning more than 200,000 euros per year -- or unmarried people earning half that -- would be affected by the tax increases. He asked all those above that threshold to stand up. No one did.
Steinbrueck renewed vows to fight tax evasion and introduce new banking regulations, saying: "We've got to control the gamblers in the banks."
The SPD leader knows he needs to win back women voters, who pollsters say are turned off by the tall, balding candidate with the sharp tongue because of his reputation for arrogance.
Before the rally in Hamburg, Steinbrueck went on a tour of a Lufthansa technology facility near the city's airport and took the time to talk to several of the younger workers doing maintenance work on jet engines.
When Steinbrueck spotted a young blonde women in blue overalls busy fixing an engine, he bolted to the right and pushed his way through a pack of photographers and journalists to shake her hand and ask her about her job.
"He just came over and asked me what got me interested in a male-dominated field like this but pretty much answered his own question before I had the chance to answer," said the 26-year-old woman named Nicole. "I said yes that was a big part of the appeal of the job for me. But he was very friendly and a lot more likeable than I would have guessed before." (Editing by Noah Barkin)