Berlin: German voters looked set to hand Angela Merkel a third term on Sunday in the first national election since Europe`s debt crisis erupted four years ago but may force her into a coalition with her leftist rivals and catapult a new anti-euro party into parliament.
The vote is being closely watched by Berlin`s European partners, with some hoping Chancellor Merkel will soften her approach towards struggling euro states like Greece if she is pushed into a `grand coalition` with the Social Democrats (SPD).
But major policy shifts seem unlikely because the centre-left SPD, whose campaign stalled after a gaffe-prone start by its lead candidate Peer Steinbrueck, agrees with the thrust of Merkel`s approach even as it accuses her of weak leadership.
Polling stations opened at 8 a.m. (0600 GMT) and the first exit polls were to be published at 6 p.m. (1600 GMT). Of the 62 million Germans eligible to vote, about a third described themselves in the run-up to the election as undecided, adding to the uncertainty.
The most recent opinion polls show support for Merkel`s conservative bloc - her Christian Democratic Union (CDU) and the Bavarian Christian Social Union (CSU) - at around 39 percent, some 13 points ahead of the SPD, the second-biggest party.
That virtually guarantees that Merkel, whose staunch defence of German interests during the crisis has sent her approval ratings soaring over 60 percent, will stay on as chancellor.
"I`ll vote for CDU because Merkel has done a good job and she`s managed to steer us through all of the various crises well so far," said Anke Luther, 47, a bank employee, adding that she thought Germany would end up with a `grand coalition`.
"Ensuring the common good is the main thing so having both the CDU and SPD in government would mean we get the best out of both parties."
In power since 2005, Merkel, a 59-year-old Protestant pastor`s daughter from East Germany, has presided over a robust economy and booming labour market.
Her modest "step by step" leadership style is criticised abroad but applauded by many at home, where she was cheered as "Mutti", or Mum, on the campaign trail.
Tough Coalition Talks
What remains unclear is whether Merkel will be able to continue atop the centre-right government she has led for the past four years. Her current partner, the business-friendly Free Democrats (FDP), has seen its support slide from a record 14.6 percent in the 2009 vote to just 5 percent in recent polls.
This means Merkel may be forced to court the SPD, with whom she governed in a right-left coalition between 2005 and 2009.
The SPD, which lost voters after that experiment, will exact a high price in any talks, including top cabinet posts such as the finance ministry and acceptance of key parts of its platform, like a minimum wages and tax hikes for the wealthy.
"They will be the most difficult coalition talks ever," said Frank Decker, a political scientist at Bonn University.
The wild card in Sunday`s election is the Alternative for Germany (AfD), a seven-month-old party that has seized on voter fears about the cost of euro zone bailouts, for which Germany, Europe`s largest economy, underwrites the biggest share.
Led by a group of renegade academics, lawyers and journalists, the AfD wants an "orderly dismantling" of the euro and says Germans should consider returning to the Deutsche Mark.
"I`ll vote for the AfD because I disagree with all of these bailouts for European countries. Merkel promises a lot but never does enough," said voter Manfred Herzog, 66, a pensioner who said he used to vote for the SPD.
If the AfD nudges above the 5 percent mark needed to enter parliament, it will be the first new party in the Bundestag since 1990 and the only one to favour a breakup of the euro, the currency created in 1999 and now shared by 17 countries.
"If the AfD enters parliament, it will change the euro debate in Germany," a close aide to Merkel told Reuters.
Should the AfD win seats, Merkel could be denied her centre-right government of choice.
Speaking to 4,000 supporters at the Tempodrom arena in Berlin on Saturday, she seemed to acknowledge that risk, departing from script to urge voters to stand by the euro.
"A stable euro is not only good for Europe, it is crucial for Germany as well," Merkel said. "It guarantees our well-being and our jobs."
Even if Merkel is able to preserve her centre-right government with the FDP, she will probably have to rule with a much smaller majority in the Bundestag and deal with an SPD-dominated upper house that could block major legislation.