Voters in Hamburg go to the polls Sunday in state elections forecast to see German Chancellor Angela Merkel's conservatives shed support in the northern port city.
Opinion polls gave her Christian Democrats (CDU) 42 percent of the vote -- a clear lead over the Social Democrats (SPD) who can hope for 34 percent, but not enough to retain sole control of the 121-seat regional legislature in Hamburg.
"The days of an absolute majority and control of the Hamburg parliament are over for CDU mayor Ole von Beust," ZDF television said on the eve of the vote.
Sunday's election and those in the states of Hesse and Lower Saxony last month are seen as pointers to national elections in 2009 in which Merkel will seek a clear majority after an inconclusive outcome in 2005 forced her into an uneasy national coalition with the SPD.
The January state elections signalled a shift to the political left, leading observers to say economic reforms are unlikely ahead of the next national ballot.
In Hesse, the CDU suffered heavy losses after running a hardline campaign on crime and immigration that saw it accused of racism.
That debacle put the Social Democrats in pole position to form a government in Hesse, which incorporates the financial capital of Frankfurt, and strengthened its position in the delicately balanced national coalition.
But both Germany's biggest parties fear fallout from revelations in the run-up to the vote of massive tax fraud by the elite involving secret trusts held in Lichtenstein.
The scandal risks entrenching discontent with the wealth gap between fat cat bosses and workers who feel the government has not allowed them to taste the fruits of the country's economic recovery.
Civil servants striking for pay rises this week drove home the point when they held up banners reading: "We need at least eight percent because we also want to invest in Liechtenstein."
The Hamburg vote is expected to confirm a surge in support for The Left, a grouping of former East German communists and Social Democrat defectors who scooped up protest votes in Hesse and Lower Saxony.
The Left is tipped to take up to seven percent of the vote in Hamburg, but the party is an unlikely kingmaker because it is considered tainted by its communist-era past.
Regional SPD leader Michael Naumann has said he would rather remain in opposition that rule with The Left, making a possible outcome of the vote an unprecedented link-up between the CDU and the Greens to run Hamburg.
Polls will open at 8:00 am (O700 GMT) in the city-state, which has 1.2 million registered voters.
