UPDATE 2 - Merkel bloc wins election but faces far-right challenge

UPDATES WITH MERKEL’S REMARKS, LATEST PROJECTIONS

BERLIN (AA) - Chancellor Angela Merkel’s bloc has won a fourth term in German elections, but will face a far-right opposition in parliament, projections showed on Sunday.

Public television ARD put support for Merkel’s conservative CDU/CSU bloc at 33 percent, down from 41.5 percent in the last federal election in 2013.

Despite a nearly 13-point lead over their Social Democrat rivals, Merkel’s conservatives failed to secure an outright majority in Germany’s parliament, the Bundestag.

Merkel said she would seek to form a stable coalition government, either a "grand coalition” with the Social Democrats, or a three-party coalition with the liberal Free Democrats (FDP) and environmentally minded Greens.

During a post-election party leaders’ discussion on ARD, Merkel said she noted SPD leader Martin Schulz’s opposition to a new grand coalition.

The chancellor made it clear that she would prefer to not form a minority government, at a time of major international and domestic challenges.

- Far-right AfD surges into parliament

The far-right Alternative for Germany (AfD), which took an anti-immigration and anti-Islamic line during the election campaign, managed to get into the federal parliament for the first time.

Riding a sharp increase in voter support, it was projected to reach 13 percent, making it the third-largest political group in the Bundestag.

Four years ago, the AfD failed to pass the 5 percent threshold and was unable to enter the federal parliament.

It became the first far-right party to enter the Bundestag since the 1960s, showing the refugee crisis’ large impact on German society.

- Historic defeat for SPD

Merkel’s major rival Social Democratic Party (SPD) suffered its biggest defeat since 1949, as projections showed it with 20.7 percent.

Addressing a crowd of SPD supporters at party headquarters on Sunday night, Schulz said the Social Democrats would not enter a new “grand coalition” with Merkel’s Christian Democrats.

Schulz said that instead the SPD would assume the role of main opposition party.

- Potential coalition partners

Merkel said before the elections that she was open to all possible coalition options, except a partnership with the far-right AfD or the socialist Left Party.

The liberal Free Democrats (FDP), one of the Christian Democrats’ potential coalition partners, managed to win 10.6 percent.

Another potential coalition partner, the environmentally minded Greens, were projected to reach 9 percent, up from 8.4 percent in federal elections in 2013.

The socialist Left Party also managed to slightly increase its support, reaching 9 percent.