Merkel agrees coalition with Social Democrats

German Chancellor Angela Merkel's conservatives early Wednesday agreed to form a coalition government with the Social Democrats, negotiation sources told AFP, two months after they won elections but fell short of a full majority. Merkel's Christian Democrats, their Bavarian allies the CSU and the Social Democrats (SPD) agreed the deal after marathon talks lasting 17 hours and were due to formally present it to a meeting of some 75 delegates from all three parties, the sources said. The chancellor now hopes to be sworn in for a third term on December 17 as leader of Europe's biggest economy, but a key hurdle remains: a binding SPD membership ballot next month must still sign off on the proposed left-right 'grand coalition'