Merkel coalition, rivals in tight German state election

BERLIN (AP) - Chancellor Angela Merkel's conservative-led coalition was neck-and-neck with Germany's centre-left opposition in a state election on Sunday that was a major test ahead of a national vote later this year, projections showed.

Lower Saxony state, which occupies a swathe of north-western Germany, has been run for the past decade by a coalition of Dr Merkel's conservative Christian Democrats and the pro-market Free Democrats, the same parties that form the national government.

Dr Merkel will seek a third four-year term in national parliamentary elections expected in September. She and her party are riding high in polls, but the opposition hoped Lower Saxony will show she is vulnerable.

Projections for ARD and ZDF television, based on an exit poll and partial counting, showed Dr Merkel's Christian Democrats winning just over 36 per cent in Sunday's election for a new state legislature in Lower Saxony and their junior coalition partner, the Free Democrats, about 10 per cent.

The opposition Social Democrats and Greens hope to oust them from the regional government; The projections put their support at about 32.5 per cent and 13.5 per cent, respectively. If those numbers hold, the two television stations projected, Dr Merkel's coalition would have a single-seat majority in the legislature in Hannover.

Attention ahead of the election had focused on whether the Free Democrats, whose support has eroded badly since they joined Dr Merkel's national government in 2009, would win the 5 per cent support needed to gain seats in the state legislature; Polls had suggested that it might not, and that that could hand the state to the opposition.

Dr Merkel and her party have been bolstered nationally by a relatively robust economy, low unemployment and the Chancellor's hard-nosed handling of Europe's debt crisis - criticised in debt-burdened European countries but well-received among German taxpayers.

Dr Merkel has also profited from stumbles by the Social Democrats' candidate for chancellor, Mr Peer Steinbrueck, a former finance minister whose personal popularity lags far behind Dr Merkel's.

Over recent weeks, Mr Steinbrueck has drawn criticism for saying the Chancellor earns too little - adding to controversy over his own high earnings from the public-speaking circuit.

That has not helped a campaign which promises to narrow the gap between Germany's haves and have-nots. His party only narrowly improved on a feeble performance five years ago in Lower Saxony, but their allies, the Greens, were strong. "We know that we should have delivered a bit more tailwind" for the campaign in Lower Saxony, said the Social Democrats' national general secretary Andrea Nahles. She said that Steinbrueck would "of course" remain Dr Merkel's challenger.