German Chancellor Angela Merkel says the priority of her second term in office will be to return prosperity to Europe's largest economy.

Merkel, who swept back to power in Sunday's election, will now open talks with the liberal Free Democrats (FDP).

She believes a coalition between them and her centre-right CDU/CSU bloc offers the best chance for recovery.

Her previous coalition partners, the Social Democrats (SPD) suffered their worst election performance for decades.

In her victory speech, Merkel said she wanted to be a chancellor of all Germans at a moment of crisis and that protecting and creating jobs would be her "highest aim".

She added: "We can really celebrate tonight, but afterwards we have a hard job ahead of us."

Merkel's bloc is now set to form a centre-right coalition with the FDP - an alliance which she says will get Germany out of its worst crisis in 60 years.

Projections by national broadcasters gave the CDU/CSU 33% of the vote, with the Social Democrat SPD at about 23% - its worst result since World War II.

The Free Democrats took about 15%, the Left party 12% and the Greens 10%.

Analysts say the combined 48% for the CDU and FDP should allow them to form a stable majority government in Germany, Europe's largest economy and the biggest member of the European Union.

The results mean the SPD, which has been the junior partner in the "grand coalition" for the past four years, will be ejected from government.

SPD leader Frank-Walter Steinmeier said his party would be "vigilant in opposition".

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