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[BERLIN] Chancellor Angela Merkel was struggling on Sunday to prevent a collapse in high stakes coalition talks, which could force new elections and destabilise Germany and Europe.
Elections in September left the veteran leader weakened and without a majority as some of her party's voters turned to the far-right Alternative for Germany (AfD), angered by her liberal refugee policy.
The disputed decision to let in more than a million asylum seekers since 2015 is also proving to be a stumbling block as she seeks an alliance with an unlikely group of parties spanning the left and right of the political spectrum.
Dr Merkel's conservative CDU party and its Bavarian allies the CSU have been trying to find common ground with the pro-business FDP and the Greens.
Party chiefs had initially set 6.00pm (1700 GMT) Sunday as the moment of truth, but the deadline went by without a breakthrough - the second overtime after already missing a previous target on Thursday.
Bild daily said on its website that "failure is in the air", while other German media were speculating that parties may call time-out to reflect on their options.
If talks collapse, Germany risks returning to the polls in 2018, as the centre-left Social Democratic Party (SPD) has ruled out returning to a coalition with Dr Merkel after suffering a humiliating loss at September's elections.
CDU vice-chief Julia Kloeckner urged negotiators to "pull together and get something done".
For Dr Merkel, who has years of gruelling EU negotiations under her belt, this could be the most important weekend of her political life.
"Today is not only about (the coalition), but also a day of destiny for Angela Merkel. If she fails to forge a coalition, then her chancellorship is in danger," said Bild.
Frank Decker, a political scientist at the University of Bonn, told Phoenix news channel: "It is absolutely in her interest for this government to come into being, because failure would spell her end."
A poll by Welt online found that 61.4 per cent of people surveyed said a collapse of talks would mean an end to Dr Merkel as chancellor. Only 31.5 per cent thought otherwise.
Dr Merkel, in power for 12 years, had initially set a Thursday deadline to decide if the motley crew of parties had found enough common ground to begin formal coalition negotiations.
But the talks went into overtime without a deal, with the hot-button issue of immigration emerging a key sticking point.
The CSU, which lost ground in Bavaria to the AfD and faces a state election next year, wants to limit the number of future arrivals to 200,000 a year.
The Greens were reportedly ready to give way on the CSU's demand, but in return, were insisting that war refugees - who are granted only temporary protection - should be allowed to bring their family members to Germany.
"We will not accept that people who are already getting a lower status of protection by law are also excluded from family reunions. That is inhumane," Greens negotiator Juergen Trittin told the Bild am Sonntag newspaper.
The Greens will be wary of making concessions ahead of a party congress in a week's time, and rank-and-file members can still torpedo any deal that they deem unsatisfactory.
'COALITION OF MISTRUST?'
As parties dug in their heels, Germany's President Frank-Walter Steinmeier told Welt am Sonntag newspaper that "all sides are aware of their responsibilities. And this responsibility means not returning their mandate to voters".
Sueddeutsche daily noted that Steinmeier's warning came because he sees in new elections "the risk that even a bigger coalition or a Jamaica coalition would no longer have a majority." "Then the loss would have been greater than the failure of forging a government," it said.
If the potential tie-up, dubbed a "Jamaica coalition" because the parties' colours match those of the Jamaican flag, comes together, it would be the first of its kind at the national level.
But questions abound about how stable it would be.
SPD parliamentary chief Andrea Nahles told the Funke media group she believed such an alliance would be "a coalition of mistrust, in which there is constant conflict, where each one plays his own cards, and where there isn't teamwork".