UPDATE 1-Germany's SPD says all options open in search for new government

(Combines urgents, adds background)

BERLIN, Dec 1 (Reuters) - The leader of Germany's Social Democrats (SPD) said on Friday he ruled out no option in helping to form a new government but stressed that a re-run of the outgoing "grand coalition" with Chancellor Angela Merkel's conservatives was not a done deal.

Germany, Europe's political and economic powerhouse, has been without a government since a Sept. 24 national election.

Merkel, her own political future on the line after 12 years at the helm, is making overtures to the centre-left SPD - her partner in government over the past four years - after her bid to form a three-way coalition with two smaller parties failed.

The SPD, which had wanted to go into opposition after suffering its worst post-World War Two election result, fears its own distinctive identity and policy ideas will again be smothered in any tie-up with Merkel's bigger centre-right bloc.

"Regarding the formation of a new government, there was broad support for not ruling any option out," SPD leader Martin Schulz said after party board discussions in Berlin.

Schulz, who held talks on Thursday evening with President Frank-Walter Steinmeier, Merkel and her Bavarian ally Horst Seehofer, denied he had agreed to a re-run of the "grand coalition" that has ruled Germany for the last four years.

"I can clearly deny the media report about me having given the green light for grand coalition negotiations. This is simply wrong," Schulz said, adding that the report appeared to be based on sources within Merkel's conservative CDU/CSU bloc.

"We have a lot of options for building a government. We should talk about each of these options. That's exactly what I will propose the party leadership on Monday," he added.


Merkel's camp said the ball was in the SPD's court.

"It's now up to the SPD to provide clarity," said CDU manager Klaus Schueler. "The fact that we underlined today that we are prepared to enter such talks with the SPD shows that we're aiming to bring these talks to a successful conclusion."

But another senior member of Merkel's Christian Democrat Union (CDU), Mike Mohring told broadcaster NDR he did not expect a new German government to be formed before March 2018.

Schulz, a former president of the European Parliament, also said he wants changes in Germany's approach to the European Union and in economic and social policy.

In an interview with Der Spiegel magazine, Schulz said the SPD agreed with French President Emmanuel Macron's call for closer eurozone integration including a new finance minister for the currency bloc.

"Giving Emmanuel Macron a positive answer will be a key element in every negotiation with the SPD," Schulz was quoted as saying in the interview on Friday, adding that he also backed a joint EU tax policy. (Writing by Gareth Jones; Editing by)