Angela Merkels conservatives and Gerhard Schroeders Social Democrats (SPD) threatened on Wednesday to break off talks on forming a new German government amid a damaging stand-off over who should lead the country. Ahead of a third round of exploratory discussions between Germanys top two parties, allies of Merkel reiterated that no serious coalition negotiations could take place unless Chancellor Schroeder agreed to step aside. If it doesnt happen, well simply have to interrupt the talks, said Dieter Althaus, Christian Democrat (CDU) premier of Thuringia. Although Merkels CDU and its sister party,CSU, won four more parliamentary seats than the SPD in a September 18 election, Schroeder has refused to relinquish power. With an eye to public opinion, Schroeder did say in a television interview on Monday that he would not stand in the way of a so-called grand coalition. But his party appears hopeful that by keeping him around they can extract more concessions from the conservatives in the looming negotiations forced on both parties because neither won enough votes to form a government with their preferred allies. If the Union puts conditions on the talks then they will be over very quickly and then there will be a pause until the Union has returned to its senses, SPD deputy parliamentary group leader Ludwig Stiegler told n-tv television.