Germany's Chancellor Angela Merkel (File photo)

German Chancellor Angela Merkel pledged Friday that the new government she is seeking to form would work toward a "fresh start" for Europe, after reporting a breakthrough in marathon coalition talks.

"The world is not waiting for us -- we need a fresh start in Europe," she said at the end of more than 24 hours of negotiations between her conservatives and the Social Democrats.

"A fresh start for Europe is also a fresh start for Germany."

Merkel's conservatives reached a "breakthrough" deal Friday with the second biggest party, the Social Democrats, toward building a new "grand coalition" government, sources close to the negotiations said.

After more than 24 hours of talks, the party chiefs reached an in-principle agreement to start formal coalition negotiations that could lead to a new government in coming months, the sources told AFP.