BERLIN - Conservative leader Angela Merkel and the chairman of Chancellor Gerhard Schroeder's Social Democrats said today they both had initiated contacts with potential coalition partners as they wrestled over what government will emerge from Germany's inconclusive parliamentary election.

Merkel urged her rival's party to "accept that they are not the strongest party" after Sunday's election and enter talks on a broad right-left alliance under her leadership. But within minutes, the chairman of the Social Democrats, Franz Muentefering, said he had written to other party leaders to invite them to hold talks on a new coalition.

"I have initiated contact with the offices" of the other parties, Merkel said.

She added that she, like Schroeder, would refuse to hold talks with the Left Party - an alliance of ex-communists and former Social Democrats angered by the chancellor's efforts to trim the welfare state.

Muentefering said any linkup between his party and Merkel's would be without Merkel as chancellor.

"The message was clear: this country does not want Mrs. Merkel as chancellor," he said.

Voters denied a majority to both Schroeder's outgoing government of Social Democrats and Greens and Merkel's preferred combination of her Christian Democrats and the pro-business Free Democrats.

As Germany's benchmark stock market and the euro dropped amid gloom over the muddled outcome, leaders of the main parties met in Berlin to plan their next move.

Official results showed Merkel's party and their Bavarian sister party, the Christian Social Union, winning 225 seats, three more than the Social Democrats. The Free Democrats got 61, the Greens 51 and the new Left Party, an alliance of ex-communists and former Social Democrats alienated by Schroeder's efforts to trim the welfare state, 54.

Those results were based on counting from 298 of 299 districts; voting in the final district, in the eastern city of Dresden, has been delayed until Oct. 2 because of a candidate's death.

Schroeder refused to back off his claim to form a new coalition, saying that his party "has made clear its will to lead this country in government."

"Our task is to implement this declared will of our whole party, and we will do that," he told cheering supporters in a brief appearance at the Social Democrats' headquarters. He did not elaborate.

"I do not rule out anybody revising their position," Merkel said of Schroeder. She said a new government should be formed quickly, adding that "we are not playing for time."

A "grand coalition" of the two main parties appeared a likely outcome.