German Chancellor Angela Merkel says her conservatives still have high hurdles to clear in Thursday's talks on forming a coalition with the Social Democrats.

She spoke at the start of the final day of exploratory talks that could lead to formal negotiations. Merkel said it would be a tough day, but that she recognises Germans expect results. SPD leader Martin Schulz, a former president of the European Parliament, made clear his priority was Europe. Schulz has called for a so-called United States of Europe by 2025 -- an idea rejected by senior conservatives. The SPD also is offering members a vote on Jan. 21 on whether to proceed.

Meanwhile, the youth branch of the SPD is against a grand coalition, and suggests Merkel could try to form a minority government or accept new elections.