The Social Democratic victory also contrasted with a shift to the right in Austria, where an election put the center-right People's Party under Sebastian Kurz in position to form a coalition with the far-right Freedom Party.
Merkel's conservatives, comprising her own Christian Democrats (CDU) and Bavarian Christian Social Union (CSU), are striving for a tie-up with the pro-business Free Democrats (FDP) and the Greens, Reuters reported.
A potential coalition between the CDU/CSU, FDP and the Greens, is often referred to as the "Jamaica coalition", as the traditional colors of these parties - black, yellow and green - correspond to Jamaica's flag.
But policy differences are wide and in the last few weeks politicians from all parties have set out their stall, narrowing room for compromise in policy areas from immigration to the European Union and environmental policy.
Peter Tauber of Merkel's CDU party said it was the "first, constructive exchange" between the parties.
"We have a good feeling", he said. Straight-faced representatives of the CDU, CSU and Greens told reporters the meeting had been positive but made clear that it would take a long time to nail down an agreement.
The untested three-way alliance is now the only option available for Merkel after her CDU/CSU lost voter support in the September 24 election and her current coalition partner, the centre-left Social Democrats, decided against joining a new CDU-led government.
Chancellor for 12 years and known as a skilled negotiator, she angered many voters over her open-door migrant policy and her conservatives saw their worst election result since 1949.
She has said she expects a government to be in place by Christmas, but some senior politicians say January is more likely.
The parties recognize it will not be easy.
"Jamaica and Germany are 8,500 kilometers apart", Nicola Beer of the FDP told reporters after the first round of talks with the CDU/CSU on Wednesday. "We agreed that some of us might need to be creative to continue on this path in this way".
One of which will be immigration.
That may be unacceptable to the Greens.