Schroeder appeared before cheering supporters at Social Democratic Party (SPD) headquarters in Berlin early Monday morning following the country's closest national election since World War II.

The chancellor and his foreign minister, Joschka Fischer, told the jubilant crowd they would start coalition talks soon.

"We will lead the coalition negotiations," said Fischer, popular leader of the Greens, the junior partner in the ruling government with Schroeder's SPD.

"This will be a co-operation built on a common foundation. It will be fair," Schroeder said. "We have hard times in front of us and we're going to make it together."

With 99 percent of the vote counted, Schroeder's coalition won a combined 47.1 percent of the vote, according to official results reported by The Associated Press.

Challenger Edmund Stoiber's party, the Christian Democratic-Christian Social Union (CDU-CSU), and its traditional partner, the liberal Free Democratic Party (FPD), won a combined 45.9 percent, the results showed.

Projections by all three television networks showed Schroeder's coalition holding onto a slim majority of seats in the Bundestag, or lower house of parliament.

Stoiber indirectly conceded victory when he spoke to party faithful in Bavaria shortly after midnight, admitting he may not be able to form a new government based on election results.

But the Bavarian leader predicted Schroeder's coalition would be too fragile to last a full four-year term.

"Should we not be able to construct a government ... the Schroeder government will only be able to govern for a very, very short time," Stoiber said.

"We're capable of taking over the government even if it's not possible immediately. In a year's time I will take over and construct a new government.

"Perhaps there is a piece of universal justice here," Stoiber said. "Perhaps he (Schroeder) will have to live through what he has brought us."

"With (Schroeder's) coalition, Germany won't return to economic health and it won't break out of the isolation from Europe and America that Schroeder drove it into."

Schroeder has drawn criticism from the Bush administration for opposing a possible U.S.-led war against Iraq, although the stance gained him support among German voters during the campaign.

Projections showed Schroeder with a majority of anywhere from 11 to 15 seats.

An RTL/Forsa projection for n-tv private television showed Schroeder's SPD with 38.6 percent, Stoiber's CDU-CSU with 38.3 percent, the Greens at 8.6 percent and the liberal Free Democratic Party (FDP) -- the conservatives' traditional partners -- at 7.3 percent. That would give Schroeder's current SPD-Green coalition a 15-seat lead.

An Electoral Research Group projection for ZDF public television put the CDU-CSU and SPD in a tie at 38.5 percent, the Greens at 8.5 percent and the FDP at 7.4 percent. That would translate into an 11-seat majority for Schroeder.

A projection by Infratest Dimap for ARD public television put the CDU-CSU and SPD in a tie at 38.6 percent, the Greens at 8.6 percent and the FDP 7.4 percent. That would also give Schroeder an 11-seat majority.

Stoiber, speaking in Bavaria, repeated his claim earlier in the evening at party headquarters in Berlin that the CDU-CSU had won the election.

CNN's Chris Burns said Stoiber may have been referring to the fact that the CDU "put themselves back together" with the help of their sister party, the CSU, after the CDU "self-destructed" over a financial scandal.

"The CDU, the great party of the center, is back," Stoiber told a crowd of cheering supporters in Berlin. "It is the biggest party in parliament. We will make what we can of this great result."

But Schroeder told an audience at SPD headquarters: "Sometimes those who are happy early are disappointed later.

"We want to continue this administration, and it seems we will be able to. We have good prospects to continue," Schroeder said.

For the Greens and Fischer, it was their strongest showing in the party's 22-year history.

When asked if the Greens would set a high price for co-operation, Fischer said: "We know many people wanted this constellation. We had a good result. We have to be modest in victory."

But for the Party of Democratic Socialism (PDS), all three projections showed the former East German Communist Party with about 4 percent of the vote -- not enough to cross the 5 percent threshold to gain a place in parliament.

Polls opened on Sunday with rain and heavy clouds over much of the country and closed at 6 p.m.

Stoiber was the first of the chancellor candidates to vote, arriving in blazer and red-and-white striped tie and accompanied by his wife in his hometown Wolfratshausen, south of Munich.

Schroeder arrived some hours later at a polling booth in Hanover, also with his wife.

Schroeder used his last campaign rally on Saturday to reinforce his opposition to a U.S. war in Iraq, which has dominated campaigning in the run-up to the polls.

Alleged comments by his justice minister likening U.S. President George W. Bush's stance on Iraq to Hitler's use of foreign policy to hide domestic woes overshadowed the final day of campaigning and prompted Schroeder to write a conciliatory letter to Bush.

Minister Herta Daeubler-Gmelin has denied a report by the mass circulation newspaper Bild Zeitung that she plans to resign after polls close, under growing pressure from Schroeder's Social Democratic Party.

"No of course not," Daeubler-Gmelin told The Associated Press on Sunday after voting in the southern city of Tuebingen.

"Those are just malicious rumors meant to create uncertainty among voters."

Government spokesman Uwe-Karsten Heye, however, has not explicitly denied the report, but did dismiss it as speculation.

(China Daily September 23, 2002)