* SPD says minimum wage of 8.50 euros essential
* Party to seek backing from core members on Sunday
* Formal coalition talks could then start Wednesday
By Holger Hansen
BERLIN, Oct 20 (Reuters) - Leaders of Germany's Social Democrats (SPD) have listed their key demands of Angela Merkel ahead of a meeting on Sunday in which they will seek the backing of 200 core party members for launching formal coalition talks with the chancellor.
These include introducing a nationwide minimum wage of 8.50 euros, equal pay for men and women, a financial transaction tax, greater investment in infrastructure and education, and a strategy to boost growth and employment in the euro zone.
No mention is made however of the tax increases for Germany's wealthiest which the SPD had campaigned for during the election but which the chancellor has absolutely ruled out.
Merkel's conservative bloc - her Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU) - emerged as the strongest political force in the Sept. 22 election. But they fell several seats short of a parliamentary majority, forcing them to seek a coalition ally.
The SPD, which came a distant second to Merkel, was seen as the most likely partner from the start; however the party is taking a stubborn approach as it struggles to avoid the mistakes it made during its 'grand coalition' with Merkel from 2005-2009.
It emerged from that legislature with its worst election result since World War Two, making many grassroots members highly sceptical about another such union.
"This time I can guarantee that we will not strike a coalition agreement in which we do the opposite of what we pledged in the election," SPD Chairman Sigmar Gabriel told German newspaper Bild on Saturday.
A draft of the declaration Gabriel will ask the SPD's top cadre to sign on Sunday and made available to Reuters states the SPD "agrees to enter formal coalition talks with the intention of forming a government."
The party concedes some compromises will be necessary but lists 10 "essential" points beginning with the minimum wage.
Others include equal pensions for seniors in the former West and East Germany, the ability to have dual citizenship, and measures to make it easier to combine work with family life.
If, as expected, Gabriel secures party backing on Sunday talks on coalition policies and cabinet posts in a new government would begin on Wednesday. They could last more than a month.
German voters, international investors and Berlin's European allies have mostly been expecting a grand coalition. Few expect an eventual partnership deal to greatly alter Merkel's cautious domestic and foreign policy agenda.
The chancellor flirted briefly with the idea of a coalition with the environmentalist Greens. But when those talks broke down earlier this week, it strengthened the SPD's hand and a grand coalition seemed all but inevitable.
Such a partnership would enjoy an overwhelming majority in the Bundestag lower house of parliament and find it easier to push legislation through the Bundesrat upper house, where the governments of Germany's 16 federal states are represented.
Once a coalition deal is struck, the SPD is still set to seek final approval in a poll of its grassroots members.