* Bavaria leader Seehofer says he's open to Greens
* Merkel's conservatives keep options open for new government
* Seehofer's CSU, Greens have history of animosity
* Unorthodox coalition still appears unlikely
A powerful conservative ally of German Chancellor Angela Merkel refused on Saturday to rule out an unorthodox coalition with the Greens party ahead of further exploratory talks next week.
Three weeks after an inconclusive election, Bavarian state premier Horst Seehofer told the Leipziger Volkszeitung newspaper it was not true that his Christian Social Union (CSU), Bavarian allies of Merkel's Christian Democrats (CDU), would thwart a deal with the Greens.
Seehofer, until now the chief opponent of such an alliance, appeared to change his tune after an unexpectedly cordial first three-hour meeting with Greens leaders on Thursday to explore the chances of a coalition between the former political enemies.
The conservatives emerged as the dominant force in the Sept. 22 election but need a coalition partner. Separate talks with SPD and Greens leaders may take up to two months to conclude.
"It's simply wrong and unfounded," Seehofer said of reports the CSU would sabotage a deal with the Greens, a left-leaning party with roots in the 1970s peace and anti-nuclear movements that has been at the opposite end of the spectrum from the CSU.
Seehofer, who previously spoke out against the Greens, said he would personally "prefer a 'grand coalition'" with the centre-left SPD, still seen as the most likely outcome.
"But the decisive question is: which party can we build a solid government with? Nothing has been decided yet," he said.
"There's nothing that divides Angela Merkel and me," he said, adding he had "positive experiences with Greens leaders".
In a separate interview with Bavarian state TV, Seehofer said: "The talks with the Greens were quite reasonable."
Germany's European partners worry that drawn-out coalition talks could delay decisions on measures to fight the euro zone crisis such as an ambitious plan for a banking union.
Seehofer's comments may signal a genuine change of heart, but could also be a tactic to wring concessions from the SPD.
It still looks unlikely that the CDU/CSU and Greens will move on to formal talks due to historic animosities.
Their first round of exploratory talks highlighted policy differences on clean energy and industry and senior Greens later played down prospects of a deal.
But some CDU and Greens leaders see a chance to explore new power options. The CDU/CSU's veteran partner, the Free Democrats (FDP), crashed out of parliament and the Greens' SPD allies were beaten by the CDU/CSU for the third straight time.
Merkel is eager to keep the Greens option open to strengthen her hand in talks with the SPD and in case the SPD balks. The SPD promised to give its 472,000 members the final word with a referendum on whether to accept a 'grand coalition'.
The SPD is in no hurry to back Merkel again since it lost much popular support during the 2005-2009 grand coalition. Many Greens supporters also prefer to see the party in opposition than in a coalition with the conservatives.
"I think it's a good thing that we're continuing talks with the conservatives because it's opening awareness for the other sides' views," Sylvia Loehrmann, a Greens leader and deputy state premier in North Rhine-Westphalia, told die Welt daily.
But she said the talks had been complicated because of the CSU's initial opposition to the Greens. The CSU, which rules with an absolute majority in Bavaria, is to the right of the CDU, which has drifted towards the centre under Merkel.
It would be easier, Loehrmann said, if the CDU was the only partner: "We have to deal with two parties on the other side."