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German Chancellor Angela Merkel addresses a meeting of her conservative CDU's youth organization, the Junge Union (Young Union), in Dresden, Germany, October 7, 2017. REUTERS/Matthias Rietschel

(reuters_tickers)

BERLIN (Reuters) - German Chancellor Angela Merkel's Christian Democrats (CDU) have agreed on the divisive issue of a refugee cap with her conservative Bavarian allies, two conservative sources told Reuters, removing a hurdle to coalition talks with other parties.

The agreement came on Sunday evening after leading members of the CDU held talks with the Christian Social Union (CSU).

Merkel aims to build a nationally untested coalition between her conservative bloc, the pro-business Free Democrats (FDP) and Greens after winning a fourth term as chancellor in a Sept. 24 election but losing much support to the far-right.

(Reporting by Andreas Rinke; Writing by Madeline Chambers, editing by David Evans)

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