From The Guardian:

Germany was on the brink of a new and volatile political era last night, after a deal was agreed that will see the conservative leader Angela Merkel become the country's first ever woman chancellor.

Three weeks of wrangling over last month's indecisive election ended yesterday when the chancellor, Gerhard Schröder, announced he was resigning. Mrs Merkel will now become chancellor and lead a "grand coalition" between her Christian Democrat party and its Bavarian ally the Christian Social Union, and Mr Schröder's Social Democrats.