Merkel, SPD agree in second round of coalition talks

German Chancellor Angela Merkel's conservatives and the Social Democrats (SPD) agreed in a second round of coalition talks on Wednesday to push for a financial transactions tax in Europe if they manage to form a new government.

"We agreed to push ahead with the financial transactions tax," said SPD negotiator Martin Schulz, president of the European Parliament, after a meeting of the main group of 77 negotiators from Merkel'sChristian Democrats, their Bavarian Christian Social Union allies and the SPD.

The two sides began formal talks last week aimed at having a new "grand coalition" government in place by Christmas, with 16 working groups drawing up policy compromises on a wide range of issues, including Europe.

Plans for 11 European Union states to tax banks about 35 billion euros a year - partly in return for getting assistance from taxpayers during the financial crisis - face stiff opposition from other EU states, especially Britain.

"It's quite clear that there are very different views even among the 11 states who want to introduce it, but nevertheless we agreed today that both parties want to have this tax introduced on a European level," Schulz told reporters.

EU lawyers say the plan is illegal because it exceeds member states' jurisdiction for taxation, could hurt non-participating EU countries and would be an obstacle to the free movement of capital and services in the single market.