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Schleswig-Holstein State Premier and top election candidate Torsten Albig arrives with Social Democratic Party (SPD) leader Martin Schulz in Berlin, Germany, May 8, 2017. REUTERS/Hannibal Hanschke

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By Paul Carrel

BERLIN (Reuters) - Germany's Social Democrats (SPD) reviewed a "difficult situation" on Monday after a second regional poll defeat this year, losing momentum as they gear up to challenge Chancellor Angela Merkel in September's national election.

The left-leaning SPD now risks a triple whammy in another regional election on Sunday in the large western state of North Rhine-Westphalia (NRW), where past votes have served as indicators of the national mood.

The party enjoyed a revival in opinion polls after nominating former European Parliament president Martin Schulz in January as its candidate to run against Merkel.

But the "Schulz effect" failed to deliver in Saarland, where his party flopped in a March state poll.

On Sunday in Schleswig-Holstein, the SPD suffered an even bigger blow as it failed to defend incumbent state premier Torsten Albig, who had governed since 2012.

"Slap for Schulz!" ran a front-page headline in Monday's edition of mass-selling daily Bild.

Albig said the SPD would reflect on why it lost in Schleswig-Holstein - a defeat that will almost certainly see the party ousted from power in a state election for the first time since 2012.

"We will find an answer even if we don't really have one today," Albig, standing alongside Schulz, told SPD supporters.

BLUNTED POLICY EDGE

Schulz said SPD leaders were "this morning... in a difficult situation."

"...At such times, when one has to accept a loss, a basic principle applies for the SPD perhaps more than other parties: the principle of solidarity with one another," he said before he and Albig left the podium walking in opposite directions.

The party needs to rally quickly if it is to hold onto power in NRW, a traditional SPD stronghold where it again enjoys the incumbency advantage but risks losing to Merkel's conservatives, as in Schleswig-Holstein.

A survey by pollster Forschungsgruppe Wahlen on Friday showed the SPD and Merkel's Christian Democrats (CDU) tied on 32 percent in NRW.

Schulz has sought to focus the national election debate on fighting inequality, trying to sharpen the SPD's policy edge, which has been blunted by spending seven of the last 11 years sharing power as junior coalition partners with the CDU.

But he has no experience of executive office and Merkel, who won the endorsement of former U.S. president Barack Obama on a farewell to Berlin visit last November, is presenting herself to voters as a crisis manager and Europe's anchor of stability.

The SPD's other problem is uncertainty about which other party it would team up with if it were to govern after September, as it could almost certainly not do so alone.

Schulz has not ruled out a possible alliance with the far-left Linke party - a scenario that cost the SPD dear in Saarland, where voters flocked to Merkel's CDU.

(Writing by Paul Carrel; editing by John Stonestreet)

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