Germany's ruling center-right coalition suffered great setback in local election held in Schleswig- Holstein, the northernmost state in the country, exit polls results showed on Sunday.

The defeat of the CDU-FDP allies in Schleswig-Holstein state, combined with a poll-indicated likely loss in the forthcoming elections due in North-Rhine Westphalia, the most populous state in the country with 18 million residents, would inflict a big blow to Chancellor Angela Merkel's ruling coalition.

The center-left opposition parties in Schleswig-Holstein turned out to edge over their central-right rivals to form a coalition with a party representing the state's Danish minority, as the vote got stuck in a stalemate on Sunday.

The Pirates party appeared to be the biggest winner, garnering 8 percent of the votes and thus had claimed seats of their own in the State's parliament for the first time, a sign of voters' disgruntlement at current political status quo.

The votes for Merlel's Christian Democratic Union (CDU) dwindled to 30.9 percent, the worst outcome for the Party in this state in five decades, while the Free Democrats, partner of the ruling coalition, sank by a big margin to only 8.2 percent of the votes, the latest polls showed.

On the opposition side, the central-left Social Democrats (SPD) took hold of 30.1 percent of the votes, up by about 4.5 percent, and the Green, their traditional ally, secured some 13 percent, while the SSW party, which represents the Danish minority in the state, claimed some 4.5 percent of the votes to become eligible to represent in the state's legislature.

"There are two parties that have lost in Schleswig-Holstein," said Sigmar Gabriel, chairman of the Social Democrats (SPD), referring to the central-right coalition. He expressed confidence that under current circumstance, the SPD is poised to form a coalition government with the Greens and the party of the Danish minority.