Germany's main parties on Friday finalized a program for incoming chancellor Angela Merkel's left-right coalition government, ending nearly two months of political uncertainty in Europe's biggest economy.

Merkel's conservative Christian Democrats and the Social Democrats of outgoing German leader Gerhard Schröder -- traditionally bitter rivals -- wrapped up a manifesto of more 130 pages for a four-year term in government.

"I am pleased to tell you that the pact for the second grand coalition at federal level in the history of the federal republic of Germany is finished," a smiling Merkel told reporters.

It ensures Merkel will become Germany's first female chancellor, and comes just ahead of a self-imposed Saturday deadline.

Outgoing SPD leader Franz Müntefering acknowledged that the odds had been against a government straddling the political divide or a so-called "grand coalition", last seen in Germany in the 1960s.

"None of us was prepared for a grand coalition -- none of you
either," he told the joint news conference. "We learned to make compromises."

Germany has been locked in political limbo since an inconclusive September 18 election which forced the Christian Democrats, who managed a narrow victory, to open coalition talks with the Social Democrats.

Friday's deal is the product of last-minute horse-trading on contentious issues such as new taxation and the future of the country's nuclear power plants.