Angela Merkel Won't Seek Re-Election As Party Chair: Reports

But party sources said Germany's Merkel wants to remain chancellor until 2021, when the next federal election is due.

BERLIN, Oct 29 (Reuters) - German Chancellor Angela Merkel told leaders of her conservatives on Monday that she will not seek re-election as party chairwoman, senior party sources said, heralding the end of a 13-year era in which she has dominated European politics.

Merkel, 64, has been chairwoman of her conservative Christian Democrats (CDU) since 2000 and chancellor since 2005. Party sources said Merkel wants to remain chancellor until 2021, when the next federal election is due.

The announcement caused the euro to fall briefly and German government bond yields rose.

Stepping down as CDU chairwoman would further undermine Merkel’s authority, which has already been dented this year by two regional election setbacks and a close ally losing his role as leader of her conservatives’ parliamentary group.

Merkel has loomed large on the European stage since 2005, helping guide the EU through the euro zone crisis and opening Germany’s doors to migrants fleeing war in the Middle East in 2015 ― a move that still divides the bloc and Germany.

“We are witnessing a continuation of the pattern in place ever since Merkel’s mistakes in the 2015 migration crisis: the gradual but steady erosion of her political power,” said Carsten Nickel, managing director at Teneo, a consultancy.

“Rather than outright instability in Germany and Europe, it simply means a continuation of the current leadership vacuum.”

Merkel’s weakness at home may limit her capacity to lead in the European Union at a time when the bloc is dealing with Brexit, a budget crisis in Italy and the prospect of populist parties making gains at European parliament elections next May.

Her decision comes on the heels of a second electoral setback in as many weeks for Merkel’s conservative alliance. In a vote in the western state of Hesse on Sunday, the CDU came out top but lost 11 percentage points in support compared to the last election in 2013.

“With these latest results, it has simply become untenable that Merkel continues to lead the CDU,” said Mujtaba Rahman, managing director at Eurasia Group, a consultancy.

“But the news might not all be bad, as this could increase the chances Merkel seeks a top EU job next year,” he added.

When Merkel came into office in 2005, George W. Bush was U.S. president, Jacques Chirac was in the Elysee Palace in Paris and Tony Blair was British prime minister.

The news that she would not seek the party chair again came as a shock to many CDU officials who believed the party’s result in Hesse could have been worse.

Merkel standing down from the party chair would allow a new CDU chairman or chairwoman to build a profile before the next national election. Merkel’s favored successor is CDU party secretary general Annegret Kramp-Karrenbauer.

Several conservative party sources said that Friedrich Merz, a former parliamentary leader of Merkel’s conservative alliance, was ready to put himself forward for the CDU chairmanship at the party’s congress in December.

(Additional reporting by Joseph Nasr Editing by Raissa Kasolowsky)