BERLIN: Chancellor Angela Merkel warned that "serious differences" remain between the parties hoping to form Germany's next government but voiced hope a deal would emerge Thursday, hours before a deadline that could trigger snap polls.
We have "very different positions" on some policy issues, Merkel told reporters, adding however that "I believe it can work".
After weeks of quarrelsome exploratory talks, Merkel's CDU/CSU bloc, the pro-business Free Democrats (FDP) and the left-leaning Greens are holding a final day of negotiations before announcing whether they have found enough common ground to begin formal coalition negotiations.
The awkward bedfellows, who differ on everything from refugees to climate protection and EU reforms, have been pushed together by September's inconclusive election, which left Merkel badly weakened as the far-right Alternative for Germany (AfD) lured millions of voters.
The stakes are especially high for Merkel, eyeing a fourth term, who set the Thursday deadline to reach an agreement in principle with the goal of having a new government in place by Christmas.
"If the conservatives, the Greens and the FDP can't pull together, there's no way to avoid new elections," Der Spiegel news weekly wrote.
"No one wants that. But is that enough to justify an alliance?"
The potential tie-up, dubbed a "Jamaica coalition" because the parties' colours match those of the Jamaican flag, is untested at the national level and how stable such a government would be is anyone's guess.
The final round of pre-coalition talks is expected to run late into the night as party officials tackle issues including migration.
Merkel is facing "her most dangerous night", Germany's best-selling Bild newspaper said.
"It's not just the chancellor's fourth term that depends on the success of Jamaica, but her entire political career."
Mindful of the anger over the 2015 refugee influx that helped carry the anti-Islam AfD into the Bundestag lower house of parliament, migration remains one of the most contentious items on the docket, with the conservatives eager to tighten asylum policy.
Merkel's Bavarian CSU sister party wants to go even further with a cap on migrant numbers.
But that is anathema to the Greens, who are pushing to ease restrictions on family reunifications for asylum seekers.
The Greens will likely dig in their heels after already watering down key campaign pledges to unblock contentious talks on the environment.
Greens leader Cem Ozdemir abandoned demands for a 2030 end date for coal-fired plants and the internal combustion engine, and called on other parties to also show some flexibility.
"You build bridges together or not at all," he told Bild.
But his proposals to make polluting diesel cars less attractive and close the country's 20 dirtiest coal plants have met with resistance from the conservatives and the FDP, who worry about job losses and disrupting the mighty auto and energy sectors.
On the eve of the talks deadline, the sniping and mud-slinging continued to play out in the media with the CSU's outspoken negotiator Alexander Dobrindt accusing the Greens of "clinging to ancient demands".
The Greens' political director Michael Kellner hit back at the CSU's "irresponsible" behaviour.
"The only conclusion to draw from Dobrindt's daily insults is that he wants the talks to fail," Kellner complained.
Despite the rifts on display, the parties have been able to reach some broad agreements in recent weeks.
At a time when the state coffers are bulging, they have committed to maintaining Germany's cherished balanced budget.
They have also agreed to improve the nation's outdated internet infrastructure, invest more in education and increase child benefits.
The parties, who are broadly pro-EU, also made some headway on Europe after the liberal Free Democrats dropped their demand to wind down the eurozone's bailout fund.
Should a Jamaica government emerge, French President Emmanuel Macron could find in Merkel a willing and much-needed co-pilot in his ambitious drive to reform the bloc -- although his plans for a eurozone budget and finance minister will still prove divisive in Berlin.
As the clock ticks down towards the crunch deadline, commentators say all sides will want to avoid triggering snap polls that could end up bolstering the AfD.
Surveys suggest there is little appetite for a return to the ballot box, and some two-thirds of voters say they expect the coalition negotiations to succeed.