German Chancellor Angela Merkel's conservatives are in talks with the centre-left Social Democrats (SPD) with the goal of having a new "grand coalition" government in place by Christmas.
The parties have created 16 working groups that are charged with proposing policy compromises on a range of issues, from economic and banking policy to the euro and energy.
Below are the latest details on the talks and comments from participants:
* The SPD have agreed to back European Union plans to prop up carbon prices by 'backloading' permits, party sources told Reuters on Monday. Merkel said last month "a degree" of backloading was needed. The EU plans had been stalled for months partly because Berlin withheld backing due to differences within Merkel's outgoing centre-right government.
* Merkel's Christian Democrats (CDU) have new suggestions to accelerate the winding up of ailing banks. Herbert Reul, CDU chief negotiator on European policy, said: "We'll create a special institution tied to the (European) Council but we have not yet agreed how it should look exactly." He said it should be possible to decide on a bank's future over a weekend in case of doubt, hence European decision-making powers were necessary.
He said the conservatives and SPD agreed on the need for a European authority but had still not agreed on its form. Until the planned European bank resolution fund is up and running, national funds should be used where necessary, Reul said.
The question is whether banks will be wound up at a European level or, as has been the case until now, at a national level.
The SPD wants a European solution but the conservatives are against this, partly due to doubts about its legality, and want to prevent the EU Commission from taking on the role of a wind-up agency without changing the EU Treaty first. The two German parties aim to reach an agreement on the issue by Nov. 13.
* Finance Minister Wolfgang Schaeuble said the parties involved in coalition negotiations broadly agreed on European policy: "After the first discussions I can see that on the whole we do not have very different positions."
Schaeuble said he had presented in the last round of talks the ideas on banking union he plans to take into consultations between euro zone finance ministers in mid-November. These entail not using taxpayers' money to rescue banks, he said.
"I didn't hear anybody sitting at the table contradict that. On the contrary, the SPD said: That's how we'll do it," he said.
* SPD leader Sigmar Gabriel stressed that his party would not sign a coalition agreement with Merkel's conservatives unless they agreed to a statutory minimum wage: "Without a minimum wage there will be no coalition anyway."
Chancellor Merkel said: "We know that we will have to be prepared to compromise on the issue of a minimum wage."
* The working group on the economy has agreed to expand broadband in rural areas and the government would make an extra 1 billion euros available per year, participants said. The proposals are to be discussed in coalition talks on Tuesday.
* Conservatives in the environment and agriculture working group want better protection from aircraft noise, which could mean extending a night-flight ban. Their negotiating positions also include support for further research into fracking for oil and gas extraction and a shift to energy generation from waste food and farm produce instead of specially grown biofuel crops.
Merkel's conservative bloc expects to reach an agreement with the SPD on the outlines of environmental policy this week. "I am optimistic we will be able to reach important agreements on Monday already," Katherina Reiche, lead negotiator for the CDU in this working group, said. She said better protection against noise from planes, trains and cars was a priority.
The conservatives want to put a safe end to nuclear power in Germany and improve global protection against the risks of nuclear power, Reiche said. The SPD also wants Germany to stop giving guarantees that make it easier to export nuclear products abroad, sources said.
* The push by the Christian Social Union (CSU) - the CDU's Bavarian sister party - for a motorway toll for foreign drivers is still contentious. The SPD objects to charging only foreigners, though the European Commission says it could be done by charging all drivers, then compensating German taxpayers.
The transport ministry is considering introducing a system based on the Austrian model whereby drivers have to buy a vignette to use German motorways and low-emission cars could get a discount, a spokeswoman said on Sunday.
* German Interior Minister Hans-Peter Friedrich said he wanted to include strict IT security standards in a coalition agreement due to the spying activities of the U.S. National Security Agency (NSA).
"In future an IT security law should oblige internet providers to route all data traffic in Europe over European networks," he said.
Thomas Oppermann, SPD parliamentary floor leader, said communications should be better protected from spying instead. (Compiled by Berlin bureau; Editing by Gareth Jones and Susan Fenton)
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