Merkel's conservatives and SPD agree to start coalition talks-newspaper

German Chancellor Angela Merkel attends the 5th African Union - European Union (AU-EU) summit in Abidjan, Ivory Coast November 29, 2017. REUTERS/Luc Gnago

BERLIN (Reuters) - German Chancellor Angela Merkel's conservatives and the Social Democrats (SPD) agreed at meeting with President Frank-Walter Steinmeier on Thursday to start exploratory talks on forming another grand coalition, Bild newspaper reported on Friday.

The newspaper said the participants - Merkel, her Bavarian ally Horst Seehofer and SPD leader Martin Schulz - had discussed various options for forming a government - from forming a grand coalition, setting up a minority government under Merkel and holding new elections. But they ultimately agreed to start talks about a re-run of the conservative 'grand coalition'.

Merkel is casting around for a coalition partner after her centre-right bloc shed support to the far right in a Sept. 24 election. Her attempts to form a three-way tie-up with the pro-business Free Democrats (FDP) and the Greens failed.

(Reporting by Michelle Martin; Editing by Michael Nienaber)