German voters have handed conservative Chancellor Angela Merkel a second term and a chance to build a new center-right government. Her center-left rivals suffered a historical defeat.

Projections by the nation's public broadcasters, based on early vote counts and exit polls, put support for Merkel's Christian Democrats at up to 33.8 percent of the vote and for the Social Democrats at 23 per cent. The Free Democrats captured nearly 15 percent of the vote.

Merkel has ruled for the past four years in a "grand coalition" with the SPD but can now end that partnership and work with the pro-business Free Democrats.

Merkel says she will hold talks with the Free Democrats on forming a new coalition government, adding that the change is needed to help nurture Europe's largest economy back to health.

Angela Merkel, German Chancellor, said, "Not just you are happy, I am, as well. We have managed something great. We have reached our goal of this election to get a stable majority in Germany, within a new government consisting of the CDU, CSU and FDP. That's great."

Merkel's challenger, Social Democrat candidate Frank-Walter Steinmeier, conceded that his party had suffered a "bitter defeat".

Frank-Walter Steinmeier, Social Democrat candidate, said, "Voters have decided and the result is a bitter day for Germany's Social Democrats. There is no question about it. It's a bitter defeat after an election campaign full of dedication and with so much support across the country."

The SPD suffered its lowest poll since World War Two. The second party in German politics will now have to return to opposition after 11 years in the government.

(CCTV September 28, 2009)