Chancellor Gerhard Schroeder's four-year-old government hung in the balance after estimates indicated that the most fiercely fought national election in Germany since World War II was too close to call. Although official estimates put Schroeder's Social Democrats narrowly behind the opposition conservatives, his coalition partners the Greens scored their best result yet and could still provide him with a majority in the around 600-seat parliament.

If the estimates hold, Schroeder's government would have a wafer-thin majority over the two main opposition parties, the conservative Christian Union alliance (CDU/CSU) around Edmund Stoiber and the liberal Free Democrats.

Regardless of the outcome, whichever coalition takes power will have only a shaky majority that will make it difficult to push through any of the major reforms the country desperately needs to tackle chronic unemployment and its ailing health care and education systems.

Election results had been fluctuating since polling stations closed at 6:00 pm (1600 GMT), initially indicating a slight lead for the government and then for Stoiber and the Free Democrats.

Official estimates and all exit polls showed the Greens in third place after strong gains over the last election four years ago, while the Free Democrats, with whom Stoiber has said he would like to form the next government, were fourth.

Stoiber, 60, was quick to claim victory after estimates gave his Christian Union (CDU/CSU) alliance up to 39.1 percent of the vote.

"One thing is clear: we have won the election," he told jubilant supporters in Berlin. "The big party of the center is back."

But Schroeder, 58, also saw victory within his grasp, saying he saw "a good chance" of continuing in government with 38.2 percent for his party, according to the estimates.

"We have nothing to be ashamed of," he told cheering supporters in Berlin.

"We have a good chance of continuing our policies. The way it is looking, we will continue them."

But he acknowledged that his party's losses in voter support compared to 1998 when it garnered 40.9 percent of the vote were "very painful".

"Of course it's my responsibility," said Schroeder, who is also the SPD party leader. "If not mine, whose?"

Among the key issues at stake in the heated campaign were how to reinvigorate Europe's biggest economy which is currently flagging, how to reduce chronic unemployment, now above four million, and the future of rocky relations with the United States amid concerns about a possible war in Iraq.

The final outcome could depend on the fate of the tiny former communist Party of Democratic Socialism (PDS).

Initial results showed that the successor to the Stalinist party that ran East Germany for 40 years had lost its place in parliament, falling short of the five-percent barrier or a win in three constituencies needed to qualify.

It would be the first time the PDS has failed to be elected to the Bundestag lower house of parliament since German reunification in 1990.

Stoiber campaigned as a man able to bring down joblessness and repair the damage he said was done to the national economy by Schroeder's coalition.

That platform won Stoiber, who is state premier in the southern state of Bavaria, a substantial lead in opinion polls, up to five percent over the SPD in early August.

However Schroeder's hands-on management of a devastasting floods crisis last month and his categoric refusal to join a US strike on Iraq brought a remarkable reversal.

Political analyst Joachim Raschke said the uncertain outcome was "the result of helplessness" among voters.

"They couldn't imagine Stoiber as chancellor and couldn't forgive Schroeder for his poor performance on unemployment," he told RTL television.

Undeterred by pouring rain in many parts of the country, turnout among Germany's 61.2 million registered voters was estimated at 79.1 percent according to ARD public television, down from 82.2 percent in 1998.

The Greens, frequently torn from within in their first four years in power over Germany's emerging role in international military operations, viewed their around 8.8 percent result as a clear triumph.

The FDP, however, was dejected after falling far short of its 18-percent goal in the election with about 7.5 percent.
Party leader Guido Westerwelle gave part of the blame to ugly headlines generated following allegedly anti-Semitic comments of his deputy, Juergen Moellemann.

PHOTO CAPTION

(L) Edmund Stoiber, Bavarian Prime Minister and conservative candidate for chancellor, smiles as he votes in his hometown of Wolfratshausen, about 60 kilometers from Munich, September 22, 2002. (Kai Pfaffenbach/Reuters)
- Sep 22 7:52 PM ET

(R) German Chancellor Gerhard Schroeder scratches his face during a television debate of the party leaders after Germany's general elections in Berlin on Sunday, Sept. 22, 2002. In background is a photograph of the Reichstag dome, which houses Germany's parliament. (AP Photo/Herbert Knosowski)
- Sep 22 5:43 PM ET