By Michelle Martin
BERLIN (Reuters) - The leader of Germany's Social Democrats (SPD) cited progress on Wednesday in a bid to win support for formal talks with Chancellor Angela Merkel's conservatives and some colleagues said rejecting a coalition would further hurt party ratings.
SPD members will vote on Sunday on whether to back coalition talks with the conservatives.
Last week they agreed to a coalition blueprint but some in the party say it does not bear sufficient hallmarks of their party and they would be better off in opposition.
SPD leader Martin Schulz is criss-crossing the country to convince delegates at the conference in Bonn to give him a mandate to pursue formal coalition talks in the face of a strong backlash from the party's left and youth wings.
Schulz said he was upbeat after a meeting with SPD members in the southern state of Bavaria on Wednesday, following stops this week in the western state of North Rhine-Westphalia, which will send about a quarter of the delegates.
"The mood was excellent," he told reporters, saying discussions were lively but resulted in broad support for the blueprint he had agreed with the conservatives.
Responding to calls from some in his party for changes to the framework agreement, he said the main points could not be altered but details could be added during coalition talks.
"A paper from exploratory talks is not the same thing as a coalition deal," he said, singling out rental caps and healthcare as areas where there could be more discussion.
Schulz also said it made sense to review the coalition after two years, a provision that is set out in last week's agreement.
The outcome of any talks is considered crucial because Germany has Europe's largest economy and Merkel has played a leading role in the continent's economic and security affairs.
SPD General Secretary Lars Klingbeil said he understood party scepticism about a re-run of the 'grand coalition' that governed Germany in the last four years but warned against the alternative.
"Before voting at the party congress SPD delegates should be aware that there are only two realistic scenarios: negotiating further or new elections," he told Die Zeit weekly's online edition.
The SPD had planned to reinvent itself in opposition after a poor election showing in September but was persuaded to enter the talks when Merkel's attempt to form a coalition with two smaller parties failed in November.
SLIDING IN POLLS
The latest INSA poll showed the SPD slipping to 18.5 percent, its worst result in that particular survey, and weaker still than the 20.5 percent it achieved in September's election - which was its poorest performance since 1933.
The coalition question has split the SPD with branches in Berlin and the eastern state of Saxony-Anhalt recommending their members vote against. The Jusos youth faction is on a "No Grand Coalition" tour to rally delegates to reject the talks.
Norbert Roemer, head of the SPD's parliamentary group in North Rhine-Westphalia said results of the exploratory talks did not make clear enough that there would be a fresh start.
He told the Sueddeutsche Zeitung newspaper: "In our party - and this is true of me too - there's a lot of mistrust of Ms Merkel and her troops."
The most divisive issues for the two blocs concern taxes, pensions, migration and healthcare but both parties are aware that a grand coalition is one of the last options on the table.
Refusal by SPD delegates to hold further talks could lead to new elections or a minority Merkel-led government for the first time in the post-war era.
By contrast, Brandenburg and Hamburg are in favour of coalition talks, as are trades unions and a dozen SPD mayors from big cities have also called on delegates to vote in favour.
Highlighting fears about the destructive effects of the divisions within the SPD, senior party figure Carsten Schneider said "there is a real worry about the survival of the SPD".
Edgar Franke, of the SPD's conservative "Seeheimer Kreis" wing, said if his party refused to join a grand coalition, it risked sliding to 15 or 16 percent. "And it won't recover from that in the long term," Franke told Focus magazine.
Merkel, who needs the SPD to back the alliance to shore up her fourth term, said Germany needed a stable government and that she was counting on the SPD to "take a responsible decision" by giving the go-ahead to formal coalition talks.
(Additional reporting by Madeline Chambers, Holger Hansen, Tom Koerkemeier; Editing by Matthew Mpoke Bigg)