Rome: Italy's Prime Minister Paolo Gentiloni on Friday welcomed the news that German politicians have achieved a breakthrough in grueling overnight talks aimed at forming a new government.


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"The agreement between Merkel and Schulz forms the basis for a new coalition government in Germany.


"This is good news for Europe," Gentiloni said in a series of tweets.


Gentiloni "has had contact" with Germany's Chancellor Angela Merkel and with center-left SDP party leader Martin Schulz after their breakthrough on talks to form a new coalition government, sources from Gentiloni's office said on Friday.


A blueprint for formal negotiations was agreed between Merkel's Christian Democrats (CDU) and their former coalition partners, the Social Democrats (SPD) nearly four months after elections were held September.


The exploratory talks reached agreement on key sticking points such as migration and the deal eases months of uncertainty that has dented Germany's global role and raised questions over its political future.


Before the next round of talks to revive the "grand coalition" that has governed since 2013 can take place, the SPD must give the go-ahead at a special party conference planned for January 21.


The centre-right CDU and its Bavarian CSU ally have been unable to form a government since September's inconclusive polls.