Sept. 15 (Bloomberg) -- Germany's Social Democrats are poised to bounce back under the leadership of Foreign Minister Frank-Walter Steinmeier, narrowing the gap in support to Chancellor Angela Merkel's party, according to pollsters.

The Social Democratic Party, coalition partner to Merkel's Christian Democrats, has ``been too long either in Mrs. Merkel's shadow or in the limelight tearing itself apart,'' said Manfred Guellner, managing director of Berlin-based polling company Forsa. Steinmeier's ``fresh and authoritative challenge could push the party back up to the 30 percent mark quite quickly.''

Steinmeier's selection on Sept. 7 as his party's candidate for chancellor at next year's election has already bolstered support for the Social Democrats, which reached record lows under the leadership of Kurt Beck. Beck resigned as party chairman the same day, to be replaced by Franz Muentefering.

The Social Democrats have between 26 percent and 27 percent support in the four polls taken since the leadership changes. As recently as Aug. 27, backing was just 20 percent, a postwar low. The latest polls show the Christian Democrats with 36 percent to 40 percent.

Steinmeier's nomination has prompted a scramble by the ruling parties as they return to Berlin this week after the summer recess to tout their policy differences 12 months before the September 2009 election. That drive to differentiate themselves may scupper any hopes of co-operation on new programs just as economic growth dips, analysts say.

Nuclear Power

Merkel, in an interview yesterday with the newspaper Frankfurter Allgemeine Zeitung, said that she backs resolutions made by her party last week to extend the life of nuclear power stations, scrapping a planned phase-out reaffirmed in the coalition agreement with the Social Democrats of 2005.

Merkel also vowed to cut unemployment insurance contributions to 2.8 percent of gross wages from 3.3 percent at present, and to reduce medical insurance, moves the Social Democrats say the social and health systems can't afford.

``These are signs that Merkel is nervous,'' Hans-Juergen Hoffmann, Berlin-based managing director of market researcher Psephos, said in an interview today. ``The SPD can easily march back to 30 percent or more -- Merkel knows how slippery polls can be.''

Peter Struck, the SPD's parliamentary leader, told reporters in Berlin Sept. 12 that his lawmakers were prepared to discuss a reduction in unemployment insurance contributions, though only to 3 percent. Allowing nuclear reactors to run for longer ``won't get our backing, nor that of voters,'' he said.

After a ``difficult'' week, ``it's sunk home that the factional fighting had to stop otherwise we're looking at defeat,'' Struck said.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

Last Updated: September 15, 2008 11:20 EDT