Gerhard Schröder's Social Democrats and Angela Merkel's Christian Democrats refused to budge in their battle to lead Germany, ahead of a Sunday poll in a late-voting city each hopes will bolster its claim to power.

Chancellor Schröder and Merkel attacked each other as unqualified to lead Europe's largest economy at separate campaign rallies in Dresden late on Friday, and yesterday their respective party deputies traded fresh blows.

Neither Schröder's centre-left government nor Merkel's centre-right coalition won a majority in the September 18 election, resulting in a hung parliament that has pushed the two main parties to warily explore joining forces in a "grand coalition".

Both Merkel - whose CDU and its Bavarian Christian Social Union (CSU) allies won three seats more than the SPD in the 613-seat parliament - and Schröder claimed they had won the right to be chancellor. Neither showed signs of backing down.

Norbert Roettgen, another CDU leader, told the Rheinische Post daily that the conservatives would be damaged for years if they were to give up Merkel's claim on the chancellery. He said he had growing doubts the SPD are fit to join a grand coalition.

Wolfgang Bosbach, deputy CDU parliamentary leader, told the Berliner Zeitung Merkel had the party's full support, although one CSU deputy who lost his Reichstag seat, Matthaeus Strebl, blamed Merkel for the conservative's poor showing on September 18.

SPD general secretary Klaus Uwe Benneter said his party, which in theory has other coalition options, won't back down.

The Sueddeutsche Zeitung reported that SPD deputies in parliament would not cast ballots for Merkel even if the leaders of the SPD were to agree to a grand coalition with her party. The chancellor must be elected by the parliament.

Ralf Stegner, SPD leader in Schleswig-Holstein, said the SPD has other coalition options to keep Schröder in office.

Both the CDU and SPD are hoping for a strong result in Dresden today, the final of Germany's 299 districts - for a psychological boost to reinforce their negotiating positions in forging a "grand coalition" to implement economic reforms.

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