In Germany, the centre-left Social Democratic Party has voted in favour of beginning formal coalition talks with Chancellor Angela Merkel's conservatives bloc.

At a special party congress in Bonn, 372 out of 642 delegates backed preliminary coalition deal with Merkel's CDU/CSU bloc.

It has given Merkel a huge relief, removing the threat of snap polls or the prospect of leading an unstable minority government. AFP

The veteran chancellor, in power for more than 12 years, said she welcomed the SPD's green light but warned that there were "many issues left to work out".

"We have a lot of work ahead of us."

The narrow vote victory also means a reprieve for Schulz, who had staked his political future on a "yes" outcome, despite initially rejecting another stint as Merkel's junior coalition partner.

"We are relieved, the result shows that we had to fight for this majority," Schulz said.

The vote, which was closely watched in Germany and abroad, paves the way for negotiators to launch in-depth talks that should lead to an official coalition agreement in several weeks.

Merkel said the first meeting on how to organise those talks would start Monday.AFP