BERLIN - Chancellor Angela Merkel's lead in the polls is narrowing days before a federal election, suggesting she could be forced into another grand coalition that might struggle to lift Germany out of a deep downturn.

Merkel is hoping to avoid a replay of the right-left partnership that has ruled Germany for the past four years, because she says it would be less stable and have trouble pushing through the policies Europe's largest economy needs.

She wants to team up with the business-friendly Free Democrats (FDP) instead, in a center-right coalition that would pursue tax relief and rein in the role of the state.

A survey from Forsa for RTL television showed her conservatives have just enough support to achieve this goal, but also that their lead is wafer thin.

Nothing is guaranteed, Forsa head Manfred Guellner told Reuters. The conservatives are getting weaker and the SPD are drawing on their reserves and mobilizing their voters a bit.

The latest poll gives Merkel's conservatives a 10-point lead over her main rivals and current coalition partners, the Social Democrats (SPD) -- meaning she is virtually assured of winning a second term.

But the center-right is just one percentage point ahead of the other three main parties put together, raising the specter of another grand coalition -- a government that analysts say could be less harmonious than the one that has ruled Germany since 2005 and may not last a full term.

The poll showed support for the SPD at 26 percent, the highest level in months.

Merkel's main rival, SPD chancellor candidate Frank-Walter Steinmeier, has taken heart from the recent gains and hopes his party can repeat the late comebacks it staged in 2002 and 2005.

Something is happening. The SPD has had tailwind in the last few days, he told reporters on Monday.

However, Steinmeier's coalition options are limited and the best he can hope for is to return as foreign minister under Merkel, with the SPD as junior partner.

He has ruled out a partnership with the Left party due to major policy differences and personality clashes. The Left includes former communists and wants to pull German troops out of Afghanistan immediately.

Steinmeier's hopes of forming a three-way partnership with the Greens and FDP, seemingly his only chance of taking the chancellor post from Merkel, were dealt a blow this weekend when the FDP ruled out such a deal.

Even if the final result is tight, Merkel may benefit from a quirk in the electoral system which could hand her conservative bloc -- the Christian Democrats (CDU) and Bavarian Christian Social Union (CSU) -- extra parliamentary seats.

These so-called overhang seats result because each voter in Germany casts two ballots -- one directly for a candidate in his or her constituency and the second for a party.

If a party wins more direct seats than it would theoretically get according to the percentage of second votes, the Bundestag lower house creates extra seats.
These seats have played only a minor role in the past. But this time round, the conservatives stand to gain up to 20 seats, say pollsters and analysts.

The overhang seats could be decisive, Guellner said.

(Editing by Jon Boyle)

Germany