Merkel wins overwhelming party backing to fend off German left

COLOGNE, Germany (Reuters) - Germany's conservatives confirmed Angela Merkel as party leader on Tuesday for the eighth time, giving her overwhelming support to fend off a growing challenge from the left and fuelling talk that she will seek a fourth term as chancellor.

With her approval ratings undiminished after nine years in office, the hyperbole attached to Merkel has escalated and her finance minister, Wolfgang Schaeuble, went as far as to compare her with Napoleon Bonaparte this weekend.

Merkel's leadership style is anything but imperial. Her speech to a Christian Democrat (CDU) congress in Cologne, which returned her as party leader with 96.7 percent of votes, was the usual lecture, this year on digitalisation and demographics.

But it was clear that the chancellor, who has not declared whether she wants another term, is already thinking about how to keep the CDU in power at the next federal election in 2017.

She chided her current Social Democrat (SPD) coalition partners for joining a regional government led by the radical Left, calling it a "declaration of bankruptcy" by the SPD.

The coalition between the Left, SPD and Greens in Thuringia sees the former communists take power in a German state for the first time since unification. Ending a quarter-century of CDU rule in Thuringia, it raises the prospect of a combined leftist challenge to the CDU in the next federal election in 2017.

"Only our own strength, a strong conservative party, can prevent Red-Red-Green from taking power at the federal level in 2017," Merkel said, referring to three parties' colours.

Merkel set out in her speech how the conservatives can fend off such a challenge - by modernising Europe's biggest economy to keep it competitive and defend record levels of employment.

She also dangled the promise of tax relief, postponed because of the financial and euro zone crises and now by Schaeuble's "black zero" target of a balanced budget and no new debt in 2015.

Scrapping "cold progression" - whereby income tax brackets are not adjusted for inflation, meaning pay rises are eaten up by higher taxes - is conditional on a balanced budget and may be blocked by state premiers, reluctant to forgo the tax revenue.

But it is the kind of compromise at which Merkel excels - in party politics and on the global stage, where she played a key role in the euro crisis and has kept lines of communication open with Russia's Vladimir Putin during the conflict in Ukraine.

With only about 30 of the over 900 delegates voting against her in Cologne, speculation that Merkel will seek re-election was fuelled by the lack of clear successors. Defence Minister Ursula von der Leyen, sometimes touted as a candidate, kept her post as a CDU deputy chairperson but with just 70 percent of votes.

"Merkel is unchallenged in her own party. If she decides to go for a fourth term, nobody will stand in her way," said Berlin political scientist Gero Neugebauer.

A poll by Emnid published last Sunday found 56 percent of Germans would like Merkel to run for a fourth term, against 37 percent who would prefer she stop after three.

Grassroots CDU supporter Wilhelm Gunkel, a 73-year-old from near Cologne wearing a tie and tweed jacket, said he hoped and assumed that Merkel would run for office again in 2017.

"But I also hope she doesn't make the mistake of failing to make way for a successor in time," he said. "Helmut Kohl (CDU chancellor 1982-1998) did that and we lost the next election."

(Additional reporting by Andreas Rinke and Thorsten Severin in Cologne and Michael Nienaber in Berlin; Writing by Stephen Brown)