"We agreed to further exploratory talks on October 14," said SPD general secretary Andrea Nahles after about three hours of closed-door talks with Merkel's Christian Democrats (CDU) and their Bavarian allies the CSU.
"There was an open-minded atmosphere," said Nahles. "We found areas of policy agreement. We also identified contentious points and differences. That's why further talks are absolutely necessary."
She said the two parties "identified the big issues" -- including finance, infrastructure, labour and education -- without going into details, adding that the negotiating partners had agreed not to reveal details as they were building trust.
The CDU and CSU -- who between them won 41.5 percent of the vote on September 22, just shy of a majority -- each sent seven members to the talks,
as did SPD, who scored 25.7 percent in the election.
The talks aimed to sound out whether Germany's two biggest parties, despite their policy differences, can again form a left-right 'grand coalition' government as they did in 2005-09.
The CDU/CSU is also due to hold exploratory talks next Thursday with the left- leaning and ecologist Greens party, who scored 8.4 percent.