German Chancellor Gerhard Schroeder appears likely to step aside and make way for conservative leader Angela Merkel to become Germany's first woman chancellor, local media quoted insiders from both parties as reporting Saturday.

In return, Merkel's Christian Democratic Union (CDU) has agreed to give half of all cabinet posts to Schroeder's Social Democratic Party (SPD), sources were quoted by German news agency DPA as saying.
 
The two parties have been engaging for a grand coalition after both camps failed to achieve majority in the Sept. 18 elections.

They are to meet again Sunday evening on the issue and the result is expected to be unveiled on Monday.

Leaders of the two parties met on Thursday evening to handle the stinging chancellor impasse that are blocking the proceedings of a grand coalition between the SPD and the CDU/CSU. The CSU refers to the CDU's Bavaria-based sister party Christian Social Union.

Schroeder departed Berlin Friday for a two-day visit to St. Petersburg, for meeting Russian President Vladimir Putin, who was celebrating his 53rd birthday.

No statements were issued about the four-hour meeting, attended by Schroeder, SPD Chairman Franz Muentefering, Merkel and CSU leader Edmund Stoiber.

A government spokesman said Friday that the results of their Thursday talks would be made known Monday morning to their parties' executives, and then presumably to the public.

The CDU general secretary, Volker Kauder, told the German news channel n-TV on the same day he was upbeat that a deal would be worked out.

"I think we've made good progress," he said.

Muentefering said Thursday that he hoped to have a package agreement in place, including a settlement of the chancellor issue, on Monday morning when his party leadership meets.

He repeated that his party was engaged in talks with the aim of keeping Schroeder as chancellor.

But sources in the party did not rule out that Schroeder may accept the post of vice-chancellor.

The SPD's Renate Schmit, incumbent family minister, said that Schroeder would be indispensable for the SPD in a coalition with the CDU/CSU.

Apart from the chancellor issue, cabinet posts, parliament presidency and policy issues were reportedly discussed Thursday and to be covered again on Sunday.

The conservatives have demanded that the personnel issue be decided before formal negotiations on a coalition government, while the SPD insisted the question be settled in formal coalition talks.

The two sides edged closer on key issues such as the labor market reform, social welfare system and public finances.

The German political crisis resulted from the Sept. 18 elections, in which neither the SPD-Green coalition nor the CDU/CSU-FDP alliance won majority.

The CDU/CSU seized 226 seats in the Bundestag, four more than that of the SPD.

After attempts to join hands with smaller parties failed, the SPD and CDU/CSU have sought to forge a grand coalition government, which was once seen in the late 1960s.

A survey released Friday by the German television network ZDF showed that 63 percent of Germans support a grand coalition and 25percent were against it.

The poll also showed 47 percent favored Merkel as chancellor, while 42 percent backed Schroeder.
 
(Xinhua News Agency October 9, 2005)