Chancellor Gerhard Schroeder and conservative leader Angela Merkel meet on Sunday to try to resolve a bitter row over who should lead Germany and lay the foundations of a coalition government of their rival parties.
But a spokesman for Schroeder's Social Democrats (SPD) said the two sides were not expected to announce any accord after the talks on Sunday evening, adding a further meeting was planned for Monday at 11 am (0900 GMT).
"There will be no final decision today," SPD spokesman Lars Kuehn said. A CDU spokesman declined to comment. A deal on Germany's next chancellor would pave the way for detailed coalition negotiations which are likely to drag on into November.
Three weeks after an election which gave neither Merkel's Christian Democrats (CDU) nor Schroeder's SPD enough votes to rule with their allies, political analysts predict they will eventually strike a deal vaulting Merkel into the chancellery and giving the SPD key ministerial posts.
"I believe that with goodwill on the part of all participants we can get a solution and a result," Guenther Oettinger, CDU premier in the state of Baden-Wuerttemberg, said in a radio interview on Sunday.
Sunday's meeting, attended only by Schroeder, SPD Chairman Franz Muentefering, Merkel and Edmund Stoiber, a Merkel ally and head of the CDU's Bavarian sister party, the Christian Social Union (CSU), is due to start at 1800 GMT in Berlin.
The CDU and SPD plan to present the details of any agreement to the leadership of their parties on Monday morning before the next round of discussions, Kuehn said, adding that the SPD planned to meet at 1000 GMT.
Merkel's conservatives won four more parliamentary seats than the SPD in last month's election but Schroeder has refused to step aside, plunging Germany into a political limbo that economists say could further damage the ailing economy.
Germany's gross domestic product (GDP) is expected to grow a mere one percent this year, the weakest in the 25-nation European Union. Unemployment hit a post-war high of over 5.2 million people in February.
Financial markets have been watching the talks closely to see how far Merkel, seen as a keen advocate of structural change, will have to water down her reform agenda to appease the SPD and secure the chancellorship.
If Merkel makes too many concessions it could delay or scupper some of the changes Germany urgently needs to boost its growth rate, financial analysts say.
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