Merkel, who won September elections without a clear majority and must now forge a multi-party government, predicted that negotiations would continue to be "difficult" but added that she believed an agreement could be reached "if we all try hard".
Leaders of her conservatives, the pro-business Free Democrats (FDP) and ecologist Greens said they would meet again next week to hammer out compromises, having so far agreed only on relatively uncontentious issues like
the need to support families, improve education and boost digital infrastructure.
FDP delegate Wolfgang Kubicki said that, while they seek common ground despite deep ideological and policy differences, all sides had agreed to tone down public sniping and name-calling that has threatened to poison the atmosphere.
"If we keep throwing pies at each others' faces, we don't need to keep talking," he said.
The common goal is to cobble together by year's end an unprecedented federal "Jamaica coalition" -- nicknamed after the parties' colours, which match those of the Caribbean nation's flag -- to govern Europe's top economy.
A breakdown of the talks would likely trigger new elections, which could cost Merkel's conservatives particularly dearly and further boost the far-right Alternative for Germany (AfD) party which has entered parliament for the first time.
"If the alliance does not come together, Merkel is finished," weekly newspaper Die Zeit said.
'Mother Teresa' type
The negotiators can point to a handful of accords so far on issues including maintaining a balanced budget, working toward full employment and fighting poverty in old age. Tough battles lie ahead on the Greens' push to shutter coal plants and phase out fossil fuel vehicles to meet Germany's climate goals -- red flag demands to the pro-business FDP.
Negotiators will also have to square the Greens' wish for an open multicultural society that welcomes refugees with the harder line and tough law-and-order emphasis of Merkel's Bavarian sister party the CSU. But, aside from the tricky policy issues and battle for cabinet posts, the personal chemistry among the wildly different personalities in the mix has so far proved volatile.
Kubicki, who annoyed the Greens' Goering-Eckhardt at the start of the talks with a rakish kiss of the hand, accused her this week of being a self-righteous "Mother Teresa" type.
"You get the feeling that if you have a different opinion you are a bad person," he complained.
Alexander Dobrindt of the CSU has cautioned the Greens against spreading "leftist nonsense" and accused them of "provoking a breakdown" of talks by sticking to a welcoming stance toward refugees.
"Anyone who fails to see the AfD's success and its links to the refugee crisis is not really serious about forming a government," he said, referring to the anti-immigration party whose support surged to nearly 13 percent in the election.
'Rounds of poker'
Political scientist Ursula Muench dismissed many of the broadsides as play-acting by seasoned professionals. But she said there were nevertheless "fundamental" differences, particularly between the CSU and the Greens, on globalisation and cultural identity that would be tough to bridge.
"These aren't about little compromises you can make -- they revolve around the question 'how open or sheltered do you want to make German society?'" Muench, who runs the Academy for Political Education near Munich, told AFP.
"Even if you manage to bend over backwards, how can you convince your own base that you still represent their interests?"
The camps are racing toward a November 25th deadline, when the Greens' notoriously combative rank-and-file will vote on whether enough progress has been made to enter into full-blown coalition talks.
Veteran Greens lawmaker Juergen Trittin pointed darkly to the fact that in some policy areas "we haven't even agreed on what we disagree on". The hope is that the risk of no deal will focus minds to tackle the thorniest items on the docket.
"The parties are warming up for the decisive rounds of poker," the daily Magdeburger Volksstimme said. "It was clear from the start that the road to Jamaica would be tough and fraught with risk. Don't expect miracles."
By AFP's Frank Zeller and Deborah Cole