BERLIN - German Chancellor Angela Merkel and her challenger Frank-Walter Steinmeier battled on Saturday to win over a large pool of undecided voters on the last day of campaigning before a federal election.

Merkel told a rally in Berlin, hours after arriving on an overnight flight from a G20 summit in Pittsburgh, that her conservatives must use the final campaign hours to convince the one-third of voters who pollsters say have yet to make up their minds.

Every vote counts, said Merkel, 55, Germany's first woman chancellor and the only one to have grown up in communist East Germany.

Security has been tight after a series of al Qaeda videos this week threatening a rude awakening for Germany if voters back a government that supports keeping troops in Afghanistan, where 4,200 Germans are stationed with NATO-led forces.

Police in the southern city of Stuttgart said on Friday they had arrested a 25-year old Turkish man they suspect of posting one of the threatening videos on the Internet.

Al Qaeda leader Osama bin Laden warned European countries to withdraw their troops from Afghanistan in an audio tape with both English and German sub-titles that heightened security concerns on the eve of the election.

STEINMEIER IN DRESDEN

Merkel, whose Christian Democrats and their Christian Social Union sister party have shared power with Steinmeier's Social Democrats (SPD) for the last four years in a cumbersome grand coalition, now hopes to form a center-right government with the pro-business Free Democrats (FDP).

But that potential coalition has watched a 6-7 point lead in opinion polls all but vanish in the last month.

Merkel's conservatives are still 8-11 points ahead of the SPD in polls, virtually assuring her of a second term. But she may well be forced into linking up again with the SPD, dooming her plans to pursue tax relief and extend the lifespans of Germany's nuclear plants in partnership with the FDP.

The grand coalition has drawn praise for its handling of Germany's worst post-war downturn, which Merkel said would shrink Europe's largest economy by 5 percent this year. The country emerged from recession in the second quarter, but recovery is still tentative.

A second consecutive right-left partnership could be less stable and more prone to infighting than the first, political analysts say. Merkel alluded to this in her speech, saying the SPD was racked by internal divisions.

Stability can only come from a strong CDU/CSU together with the FDP, she told about 3,000 supporters at her Berlin rally.

Steinmeier, whom media judged the winner of the campaign's only televised debate with Merkel on September 13, has been buoyed by the narrowing opinion polls and declared the race wide open.

He has warned voters against electing a center-right government that he says would put business interests above those of the poor.

Those who don't want this country to be torn apart into winners and losers must go and vote tomorrow, Steinmeier told a crowd of about 1,000 at a rally on Saturday near the Elbe River in Dresden.
Those who want to prevent a center-right coalition must get up off the sofa and go to the polling station and vote SPD.

The latest opinion poll on Friday put the combined vote of the conservatives and FDP exactly level with that of the SPD, Greens and far-left Die Linke party. The SPD, however, has ruled out a coalition with Die Linke.

Merkel's conservatives saw a big poll lead nearly vanish on election day four years ago when Steinmeier's mentor, then-Chancellor Gerhard Schroeder, mounted a furious comeback in the final days before the vote.

This time Merkel has played it safe, avoiding confrontation and counting on her strong personal popularity ratings.

(Additional reporting by Alexandra Hudson in Dresden, writing by Erik Kirschbaum, editing by Mark Trevelyan)

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