By Andreas Rinke
BERLIN (Reuters) - Chancellor Angela Merkel said her conservatives still had high hurdles to clear in Thursday's talks on forming a coalition with the Social Democrats (SPD), who are pressing for accelerated European integration.
Merkel, weakened by an election setback in September, turned to the left-leaning SPD to seek a re-run of their so-called "grand coalition" after the collapse in November of talks on a three-way coalition untested at national level.
The chancellor, who commands wide respect abroad after more than 12 years in power, needs coalition talks to succeed to avoid further erosion of her personal authority and weakening of German international influence, not least in the European Union (EU).
Speaking at the start of the final day of exploratory talks that could lead to formal negotiations, Merkel said it would be a tough day but she recognised that Germans expected results.
"Of course we also have in mind that we have to create a good policy platform for our country. So it's going to be a tough day," she said.
SPD leader Martin Schulz, a former president of the European Parliament, made clear his priority was Europe.
"On the last day of exploratory talks we will make clear that above all this must be a new start for the European Union," he told reporters. "If we join a government it will be on the condition that it makes Europe strong."
Schulz has called for a United States of Europe by 2025 - an idea rejected by senior conservatives, many of whom are wary of such ambitious reform plans they fear could see Germany funnel more of its taxpayers' money to other EU states.
However, Merkel helped lead Europe through its twin euro zone and refugee crises and is adept at finding compromises, especially on European issues.
Should the parties fail to reach a deal on Thursday they could extend the talks, though President Frank-Walter Steinmeier is eager for an agreement, keenly aware that businesses want a stable coalition to end uncertainty and avoid another vote.
In signs of incremental progress in the talks, negotiators agreed to reduce use of the weed killer glyphosate, draft plans seen by Reuters showed.
SPD Secretary General Lars Klingbeil told party members in a video message the party was striving for improvements in labour, health, education and family policy, and on Europe.
"We're fighting for that," he said in a video message, adding that the final day of exploratory talks would show "whether we can cut through the knot on these big issues".
Participants have described the negotiations as "good", but SPD leaders need to convince their party members and are offering them a vote on Jan. 21 on whether to proceed.
Merkel has ruled with the SPD in a sometimes unwieldy "grand coalition" - or 'GroKo' - in two of her three previous terms in office, including in the last parliament from 2013-2017.
But both parties bled support in the Sept. 24 election, which saw the far-right Alternative for Germany (AfD) enter the Bundestag lower house of parliament for the first time.
Many SPD rank-and-file fear a repeat grand coalition would further diminish the identity of the party, which suffered its worst result in September's vote since the modern Federal Republic was founded in 1949. Some SPD members are also concerned a new grand coalition would make the AfD the main opposition party.
Kevin Kuehnert, head of the Jusos youth branch of the SPD, said he planned to embark on a 'NoGroKo' tour of Germany to persuade party delegates to vote against the grand coalition.
Should the two biggest party groups fail to agree on moving ahead, Merkel, albeit reluctantly, could try to form a minority government or accept new elections.
(Additional reporting by Michelle Martin and Madeline Chambers; Writing by Paul Carrel; editing by Ralph Boulton)