Chastened Merkel braces for coalition tussle after vote

BERLIN (Reuters) - Germany’s Angela Merkel turns to the task of sounding out partners to build a coalition government after securing a fourth term as chancellor in Sunday’s election, although she has been weakened by a surge in support for the far right.

Damaged by her decision two years ago to allow 1 million migrants into Germany, Merkel’s conservative bloc took 33 percent of the vote, down 8.5 points from the 2013 election and hitting its lowest level since 1949.

The country’s establishment was shocked as voters flocked to the anti-immigration Alternative for Germany (AfD), which scored 12.6 percent. It was the first time a far-right party will enter the German parliament in more than half a century.

However, Merkel’s party is still the biggest parliamentary bloc and Europe’s most powerful leader said her conservatives would set about building the next government. She said she was sure a coalition would be agreed by Christmas.

“There cannot be a coalition government built against us,” she said.

Investors were unsettled by the prospect of a weaker Merkel at the head of a potentially unstable coalition with the pro-business Free Democrats (FDP) and Greens.