Merkel wins fourth term, hard right gains foothold in parliament

Merkel, who after 12 years in power held a double-digit lead for most of the campaign, scored around 33 per cent of the vote with her conservative Christian Union (CDU/CSU) bloc, according to exit polls.

Its nearest rivals, the Social Democrats and their candidate Martin Schulz, came in a distant second, with a post-war record low 20-21 per cent.

But in a bombshell for the German establishment, the anti-Islam, anti-immigration Alternative for Germany (AfD) captured around 13 per cent, making it the country's third biggest political force.

Commentators called the AfD's strong performance a "watershed moment" in the history of the German republic. The top-selling Bild daily called it a "political earthquake".

Supporters gathered at the party headquarters in Berlin cried out with joy as public television reported the outcome, many joining in a chorus of the German national anthem.

The four-year-old nationalist party with links to the far-right French National Front and Britain's UKIP has been shunned by Germany's mainstream but was able to build on particularly strong support in ex-communist eastern Germany.

It is now headed for the opposition benches of the Bundestag lower house, dramatically boosting its visibility and state financing.

Alarmed by the prospect of what Foreign Minister Sigmar Gabriel branded "real Nazis" entering the Bundestag for the first time since World War II, the candidates had used their final days of campaigning to implore voters to reject the populists.

'BIG NEW CHALLENGE'

Merkel basked in her win but admitted that she had fallen far short of the 40 per cent goal her party set.

"There's a big new challenge for us, and that is the entry of the AfD in the Bundestag," said Merkel, adding: "We want to win back AfD voters."

Germans voted in a splintered parliament, reflecting an electorate torn between a relatively high degree of satisfaction with Merkel and a desire for change after more than a decade of her leadership.

Another three parties cleared the five per cent hurdle to be represented in parliament: the liberal Free Democrats at around 10 per cent and the anti-capitalist Left and ecologist Greens, both at about nine per cent.

As Merkel failed to secure a ruling majority on her own and with the dejected SPD ruling out another right-left "grand coalition" with her, the process of coalition building was shaping up to be a thorny, potentially months-long process.

Merkel, 63, often called the most powerful woman on the global stage, ran on her record as a steady pair of hands in a turbulent world, warning voters not to indulge in "experiments".

Pundits said Merkel's reassuring message of stability and prosperity resonated in greying Germany, where more than half of the 61 million voters are aged 52 or older.

Her popularity had largely recovered from the influx since 2015 of more than one million mostly Muslim migrants and refugees, half of them from war-torn Syria, Iraq and Afghanistan.

BREAKING TABOOS

But the AfD was able to capitalise on a wellspring of anger over the asylum issue during what was criticised as a largely lacklustre campaign bereft of real clashes among the main contenders.

The party has made breaking taboos its trademark.

Top AfD candidate Alexander Gauland has called for Germans to shed their guilt over two world wars and the Holocaust and to take pride in their veterans.

He has also suggested that Germany's integration commissioner Aydan Ozoguz, who has Turkish roots, should be "disposed of in Anatolia".

Law student Sabine Maier dismissed the AfD as "too extreme" as she voted in Berlin.

But she also criticised the media for lavishly covering the most outrageous comments by the upstart party. "They aren't all fascists," she said.

MERKEL BOUND FOR 'JAMAICA'

The SPD said its catastrophic result would lead it to seek a stint in opposition to rekindle its fighting spirit.

"This is a difficult and bitter day for German social democracy," a grim-faced Schulz, a former European Parliament chief, told reporters, adding that he hoped to remain party leader.

This would leave Merkel in need of new coalition partners.

If the SPD sticks to its refusal to play ball, mathematically the most likely scenario would be a link-up with the pro-business Free Democrats, who staged a comeback after crashing out of parliament four years ago, and the left-leaning Greens.

That so-called "Jamaica" coalition, based on the party colours and the Caribbean nation's flag, would be a risky proposition, given the differences between the parties on issues ranging from climate policy to migration issues.

Schulz, 61, struggled to gain traction with his calls for a more socially just Germany at a time when the economy is humming and employment is at a record low.

The SPD also found it hard to shine after four years as the junior partner in Merkel's grand coalition, marked by broad agreement on major issues, from foreign policy to migration.