The news agency dpa has also said another prospective SPD candidate, Frank-Walter Steinmeier, is no longer available. He unsuccessfully challenged Merkel in 2009, resulting in a post-war electoral low for the SPD of 23 percent.
Since then, Merkel has led a center-right coalition government, comprising her conservative Christian Democrats, Bavarian allies, and the pro-business liberal Free Democrats.
So far, there has been no confirmation from SPD leaders of the media speculation. Two news agencies, dpa and AFP, say, however, that the Social Democrats have scheduled a press conference for Friday afternoon in Berlin.
SPD executive to meet Monday
The mass-circulation Bild, citing sources within the center-left SPD, had said earlier on Friday that the party's chairman Sigmar Gabriel, who had been a third possibility, would nominate Steinbrück at a special SPD executive meeting on Monday.
The party is bringing forward the decision, Bild said, due to mounting pressure from the SPD's regional state branches in recent days.
Previously, the SPD leadership had said a decision on candidacy would not be made until early 2013.
Steinbrück, 65, is the former premier of Germany's most populous state North Rhine-Westphalia. He has a reputation as an outspoken critic on global financial issues, including bankers' behavior and Switzerland's policy on tax evaders.
Merkel leads in survey
Fresh survey results published on Friday by the German ZDF public television station showed Merkel polling as preferred chancellor on 53 percent. Trailing her were the SPD's Steinbrück and Steinmeier, each on 36 percent. Gabriel polled only 27 percent.
Overall, Merkel's Christian Democrat Union (CDU) polled 38 percent among respondents, when asked which party they would vote for. The Social Democrats scored 29 percent, with the Greens on 13 percent, the newly formed Pirate party on six percent. The FDP liberals polled four percent, echoing its historical slump in support.
Steinbruck "most dangerous" for Merkel
Senior political scientist Gerd Langguth told Reuters that Steinbrück could "poach" voters from the CDU. Another political scientist Gero Neugebauer said for Merkel, Steinbrück is the "most dangerous candidate because" he could attract voters among Germany's mainstream middle-class milieu.
Prominent pollster Klaus-Peter Schöppner of the survey institute Tns-Emnid said the most important step was that the SPD was about to end "its long drawn-out leadership discussion."
ipj/mz (Reuters, dpa, AFP)