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Berlin – Chancellor Gerhard Schroeder and conservative challenger Angela Merkel didn’t resolve their dispute over who should be Germany’s next leader during a 2 1/2-hour meeting Wednesday, but they still called the session helpful.

Merkel came out of the meeting at the Reichstag parliament building looking relaxed and describing the talks as “constructive and serious.”

Franz Muentefering, head of Schroeder’s Social Democratic Party, called the preliminary discussions “fruitful.”

Both sides said they focused on policy but had to leave their most serious dispute – who should be the next chancellor – for further talks in the coming weeks. The two sides are scheduled to meet again Wednesday.

Germany’s stock market seemed willing to ignore the political stalemate and hit a new high for the year.

Germany’s Sept. 18 election resulted in both Schroeder’s government of Social Democrats and Greens and Merkel’s conservatives falling short of a majority in the Bundestag, the lower house. The two sides have had to turn to each other to try to form a majority across the left-right divide.

Merkel’s Christian Democratic Union and its allied Bavaria-only sister party, the Christian Social Union, won 225 seats, compared with 222 for the Social Democrats, with one more seat to be decided.

Merkel says that margin gives her the right to be Germany’s first female chancellor.

Both sides stressed that Wednesday’s meeting was only a prelude to decide whether full- fledged coalition negotiations could be opened in earnest.

“We held exploratory talks, we discussed policy,” Muentefering said. “All personnel questions still need to be clarified, but we did not discuss them today.”

On Sunday, voters in the eastern city of Dresden will decide one last seat in the parliament in an election that was delayed because of a candidate’s death. Pollsters say it is not likely to resolve the stalemate.

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