Departing German Chancellor Angela Merkel on Sunday called for politicians to overcome their differences, as talks between parties to choose her successor began after last week's close election.
The centre-left Social Democrats (SPD) and their candidate Olaf Scholz narrowly won last Sunday's vote with 25.7 per cent.
Mrs Merkel's conservative CDU-CSU alliance fell to a low of 24.1 per cent, as she prepares to leave as leader after 16 years in power.
While the result leaves the SPD in the best position to form a government, conservative leader Armin Laschet has also pledged to begin coalition talks in a last-ditch effort to keep the ailing alliance in power.
Speaking in front of party leaders at celebrations in Halle to mark German reunification in 1990, Mrs Merkel said the country again had the opportunity to "shape" its next chapter.
"We can argue over exactly how in the future, but we know that the answer is in our hands, that we have to listen and speak with each other, that we have differences, but above all things in common," she said.
The make-up of the next German government essentially hinges on which of the two main parties can persuade the Greens and the liberal FDP form a partnership.
The SPD held talks with the FDP, described as "very constructive" by the Social Democrats' general secretary Lars Klingbeil.
FDP secretary Volker Wissing said the parties' "substantive positions on important points differ", but he stressed that a reformist government was needed to take on Germany's biggest challenges.
The SPD later had talks with the Greens, while its rival met the FDP on Sunday evening. It will speak to the Greens on Tuesday.
The Social Democrats have discovered new momentum since taking the close election win.
A poll for the Bild am Sonntag newspaper on Sunday showed that 28 per cent of the public would vote SPD if the election were rerun, up 2 per cent from the election results. The conservative bloc lost three percentage points.
About 76 per cent of respondents said they thought Mr Scholz should be the next German chancellor, with only 13 per cent backing Mr Laschet.
Mr Scholz on Friday told Der Spiegel that it was "clear from every poll that people don't want the [CDU-CSU] to be part of the next government.
"The election result is clear. The CDU and CSU have suffered a historic defeat and have been voted out," he said.
The FDP is closer politically to the CDU than the SPD, but before the talks, its leader Christian Lindner put pressure on the conservatives.
Mr Lindner told Bild am Sonntag that they must clarify whether they "really" wanted to govern.
But the conservatives are not giving up. CSU general secretary Markus Blume insisted on Friday that a conservative-led coalition had a chance.
In what was billed as perhaps her last major speech as chancellor, Mrs Merkel on Sunday appealed to her successors to defend democracy amid the rush to form a government.
"We sometimes take our democratic accomplishments too lightly," she said.
Mrs Merkel called on the public to "reject radicalisation", while referring to a neo-Nazi attack on a synagogue in Halle two years ago.
"Diversity and difference" were not threats to society, she said, as Germany had shown in the years since the fall of the Berlin Wall.
Mrs Merkel, who lived in the communist east before reunification, was visibly moved as she described her own struggles with prejudice, and called for more "respect" for the personal histories of East Germans.
