The SPD wants to form a coalition with smaller parties on the left but most analysts still think another right-left coalition is the most likely outcome of September's election.

Senior SPD lawmaker Karl Lauterbach told broadcaster WDR: "This is a clear signal - no grand coalition. With Martin Schulz we have a better chance."

A poll conducted this month by the Emnid institute for the Bild newspaper showed that in a direct vote Schulz would win 38 percent versus 39 percent for Merkel, compared to a result of 27 percent for Gabriel and 46 percent for Merkel.

Schulz is a committed European. In 2003, Italy's then-prime minister Silvio Berlusconi caused a storm for jokingly offering Schulz a film part as a concentration camp guard.

As a young man, Schulz had to ditch his aspirations to be a footballer and later became a book seller. He announced in November he would return to German politics after his stint as president of the European Parliament.

However, his pro-European stance makes him vulnerable to attacks from the anti-immigrant and anti-euro Alternative for Germany (AfD)) which has made big gains in the last two years, especially due to the migrant crisis.

"Symbol of EU bureaucracy and a deeply divided Europe as chancellor candidate?" tweeted AfD co-leader Frauke Petry.

Gabriel said he would shortly become German foreign minister, replacing Frank-Walter Steinmeier, who will become the country's president, a largely ceremonial post.