UPDATE 1-Merkel to enter full coalition talks with centre-left SPD
* SPD leaders unanimous in supporting talks with Merkel
* Formal negotiations expected to begin on Wednesday
* Parties say compromise possible on minimum wage
BERLIN, Oct 17 (Reuters) - Leaders from German Chancellor Angela Merkel's conservatives and the centre-left Social Democrats (SPD) agreed at a meeting on Thursday to begin formal negotiations next week on forming a 'grand coalition' government.
Speaking after the three-hour meeting in Berlin, SPD Chairman Sigmar Gabriel told reporters that senior negotiators from his party had been unanimous in backing talks with Merkel.
That increases the likelihood that Gabriel will be able to win over sceptical members of his party, who will meet on Sunday for a final vote on the talks. Full-blown negotiations could then begin on Wednesday, participants from both camps said. They are expected to last between one and two months.
"We are convinced that we can find sensible solutions for both sides, and most of all for the country, even on disputed questions," Gabriel said.
Merkel's conservatives -- her Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union -- emerged as the strongest political force in an election last month, but fell several seats shy of a parliamentary majority, forcing them to seek a coalition partner.
The SPD, which ruled with Merkel in her first term between 2005 and 2009, was seen as the favourite from the start. But after exploratory talks between Merkel and the environmentalist Greens broke down early on Wednesday, negotiations on forming another 'grand coalition' became all but inevitable.
Such a coalition would enjoy a dominant majority in the Bundestag lower house of parliament, and find it easier to push legislation through the Bundesrat upper house, where Germany's 16 federal states hold sway.
On central themes like the euro zone crisis and Germany's exit from nuclear power, the differences between the parties are minimal.
More contentious is the SPD's demand for a nationwide minimum wage of 8.50 euros per hour, but even on this issue a compromise seems possible.
"We have a joint goal of seeing a sensible minimum wage ruling - I am sure we will find a result but we didn't discuss it today," said Hermann Groehe, secretary general of Merkel's CDU.
Alexander Dobrindt, his counterpart in the CSU, said there had been "clear mutual trust" between the parties in the talks on Thursday, and agreement that growth, financial stability and employment would be priorities for a new government.
"We believe that we will be able to find common answers to these huge themes in a joint coalition pact, and that is why it is right to enter coalition talks on Wednesday," Dobrindt said.