Germany may have first female chancellor

Voters appeared to have forced Germany's main political rivals into coalition with each other on Sunday, as exit polls showed conservative challenger Angela Merkel as winner but unable to form a centre-right alliance.
Projections by leading institutes broadcast on German television gave Merkel's conservatives - Christian Democrats (CDU) and Christian Social Union (CSU) - the biggest share of the vote at about 35.8 percent and their preferred partners liberal Free Democrats (FDP) 10.3 percent.
Chancellor Gerhard Schroeder's SPD stood at roughly 33.7 percent, its partners the Greens at 8.2 percent and the new Left Party at 8.0 percent.
With her conservatives the top vote-getters, Merkel, who grew up in the ex-communist east, seemed likely to replace Schroeder, who has ruled Germany for seven years, to become Germany's first female chancellor.
But the results will be a huge disappointment for her and the CDU. Without enough support to govern with the FDP, she will most likely be forced to share power with Schroeder's SPD in Germany's first "grand coalition" since the 1960s.
It is a grouping markets fear would doom her plans to push through aggressive reforms of Germany's labour market and tax system, but one which up to a third of Germans say they favour.
"We had hoped for a better result," Merkel said, conceding her preferred alliance of CDU/CSU and FDP did not appear to have a majority. "It is our duty to form a stable government."
A provisional official result was not likely to be published until after midnight local time (2200 GMT), although German television stations were progressively updating projections of the outcome.
The election had been seen as a watershed with far-reaching implications for Europe, where many countries are struggling to reconcile their cherished social welfare systems with the cut-throat demands of global competition.
Merkel had made the case that Germany needed to accelerate the structural reforms that Schroeder introduced in his second term to get back on track.
She vowed to cut bureaucracy, ease rules on firing and cut payroll costs to reinvigorate Germany's once-powerful economy.
"It's not exactly a dream result for markets and will lead to disillusion on the stock market," said Frank Schallenberger, equity strategist at LBBW. "Many market players had hoped for a conservative-led government pressing faster for reforms."
Another option that seems highly unlikely would be a so-called "traffic light" coalition between the SPD, its Greens partners and the FDP, the liberal party - which, according to the exit polls, scored far better than expected.
But FDP leader Guido Westerwelle ruled out such an alliance on Sunday, as have the Greens.