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UPDATE 2-Far-right AfD hurts Merkel's CDU in German state vote

By Paul Carrel and Tassilo Hummel

* Far-left Linke wins most votes in eastern state poll

* Far-right AfD more than doubles vote, comes second

* AfD pushes Merkel's CDU into embarrassing third place

* Result seen adding fuel to Merkel succession deal (Adds analyst comment, background)

By Paul Carrel and Tassilo Hummel

BERLIN, Oct 27 (Reuters) - The far-right Alternative for Germany (AfD) beat Chancellor Angela Merkel's conservatives into third place in Sunday's regional election in the eastern state of Thuringia, in which the incumbent far-left Linke came first, an exit poll showed.

The result follows the AfD's successes in the eastern states of Saxony and Brandenburg, where it surged into second place in Sept. 1 elections, and marks a setback for Merkel's Christian Democrats (CDU).

The Linke won 29.7% of the vote, the results forecast by broadcaster ARD showed. The AfD won 23.8%, the CDU 22.5%, the Social Democrats (SPD) 8.5%, the Greens 5.4% and the Free Democrats 5.0%. The result will make coalition building tricky.

After gaining seats in the national parliament for the first time in 2017, the AfD is trying to build momentum in the east and campaigned in Thuringia for "Wende", adopting the word used to describe the fall of East German Communism.

"Thuringians have voted for the Wende 2.0," Bjoern Hoecke, the AfD's leader in the state, said after the exit poll was released, in a "drain the swamp"-style pitch.

"This is a clear sign that a large part of Thuringia says: This can't go on. We need renewal -- this should be taken seriously," Hoecke, an anti-immigrant former history teacher, told ARD.


POLITICAL POLARISATION

Both the CDU and SPD, which rule together in an awkward 'grand coalition' at national level, lost votes from the last regional election in Thuringia in 2014.

The AfD more than doubled its share of the vote and the Linke edged up, reflecting the polarisation of state politics in which the two parties on the far left and right of the political spectrum performed most strongly.

"At the geographical heart of Germany, even all centrist parties combined would still lack a majority," Carsten Nickel, managing director at consultancy Teneo, said of the result, which marked a "difficult evening" for CDU leaders in Berlin.

"In light of another strong showing from the far-right, the CDU debate about the right path into the post-Merkel world will certainly continue," Nickel added.

Almost a year after the CDU voted her their leader, Annegret Kramp-Karrenbauer has failed to stamp her authority on the party and members are debating whether she is the right person to succeed Angela Merkel as chancellor.

Bodo Ramelow, who became the Linke's first state premier in 2014 when he teamed up with the SPD and ecologist Greens in Thuringia, told ARD: "I see myself clearly strengthened. My party clearly has the mandate to govern, and I will take it up."

But Sunday's exit poll showed that such a red-red-green, or R2G, combination would not command a majority, meaning Ramelow would probably have to form another coalition to remain state premier.

None of the parties want to go into coalition with the AfD. One of a number of nationalist movements making waves across Europe, the AfD is the third-largest party in Germany's federal legislature behind the CDU and the centre-left SPD.

Hoecke has drawn criticism from Jewish leaders and mainstream politicians for calling Berlin's Holocaust memorial a "monument of shame" and demanding that schools highlight German suffering in World War Two.

Hoecke's ultra-right stance is tearing at AfD unity. His drive to pull the party further to the right has alarmed more moderate members aware that his fiercely anti-immigrant stance is unlikely to gain traction with voters in western Germany.

In July, scores of senior AfD members condemned Hoecke's rising influence. The fight for the future direction of the AfD is expected to come to a head at a party conference in December. (Editing by Douglas Busvine and Catherine Evans)