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UPDATE 5-German SPD considers propping up Merkel, but only if members agree

* SPD had meant to go into opposition after worst post-war result

* SPD suffered badly in polls after four years under Merkel

* Any deal would be put to SPD grassroots members (Adds fresh poll)

BERLIN, Nov 24 (Reuters) - Germany's Social Democrats agreed on Friday, under intense pressure, to hold talks with Chancellor Angela Merkel on renewing their outgoing coalition government, but pledged that party members would have the final say on any deal.

The turnabout by the centre-left SPD, which had said it would go into opposition after suffering its worst result in 70 years in September's election, could help avert a disruptive repeat poll in Europe's economic and political powerhouse.

SPD leader Martin Schulz told a news conference the party leadership had reached the decision out of a sense of responsibility to Germany and Europe after Merkel's attempt to form a government with two smaller parties collapsed on Sunday.

"There is nothing automatic about the direction we are moving in," Schulz said. "If a discussion results in us deciding to participate, in any form whatsoever, in the formation of a government, we will put it to a vote of party members."

Backing for a new government could come in various forms, including a coalition, a formal agreement not to obstruct a Merkel-led minority government, or an informal agreement to tolerate it.

Rainer Haseloff, the premier of the eastern state of Saxony-Anhalt who is from Merkel's centre-right Christian Democrats (CDU), told Reuters: "I think opinion is moving in the direction of there being a grand coalition, with Merkel as chancellor, at the end of the process ...

"We are open to conversations when the SPD come with their proposals, but there will be a Chancellor Merkel and we won't budge from that," he said.

Merkel spoke with reporters after an event in Brussels, but declined to answer any questions.

A poll conducted on Monday, before the latest SPD comments, showed half of Germans supported the SPD's initial rejection of a new grand coalition, while 44 percent would support renewing the coalition government that has ruled for the past four years.

Six out of 10 Germans would support a new election, the poll by infratest dimap for broadcaster ARD showed.

CAT AND MOUSE

For the SPD, the decision on whether to support another Merkel government is a fraught one; voters rewarded its stint in the 2013-17 Merkel-led government by handing the SPD its worst result since World War Two.

Over her 12 years in power, Merkel has embraced a succession of coalition partners who then went on to suffer painful electoral defeats. A cartoon published by Cicero magazine on Friday depicted the SPD as a mouse being enticed out of its hole by a waiting feline Merkel.

German President Frank-Walter Steinmeier will host a meeting with Schulz, Merkel and Horst Seehofer, leader of the CDU's arch-conservative Bavarian sister party, next Thursday.

Steinmeier, a former SPD foreign minister, has urged his former party to reverse its pledge to go into opposition, having made clear that he saw fresh elections as a last resort.

The crisis has arisen because Merkel's conservatives also lost votes in September as the anti-immigrant Alternative for Germany surged into parliament. With the SPD licking its wounds, an unlikely-looking three-way coalition with the pro-business Free Democrats (FDP) and ecologist Greens had appeared the only option for the weakened chancellor. (Additional reporting by Joseph Nasr, Andrea Shalal and Alastair MacDonald; editing by Gareth Jones)