Aug 22 (Reuters) - German Chancellor Angela Merkel's ruling coalition will hold a cabinet meeting at a palace outside Berlin on Thursday and Friday to discuss the political programme for the second half of its term in office.

Here are some of the main policy issues which Merkel's conservative Christian Democrats (CDU) and coalition allies the Social Democrats (SPD) will be handling in coming months:

ENERGY/CLIMATE CHANGE

The government has reached broad agreement on a number of measures to tackle climate change. Some 30 proposals have been made, targeting energy savings in public and private buildings, a reduction of CO2 emissions in transport and greater use of renewable energy for household heating.

There are disagreements over whether tax advantages for highly polluting company cars should be eliminated.

PROTECTION FROM FOREIGN FUNDS

The government wants to protect important German firms from the influence of large state-run funds. Suggestions include forcing foreign institutions which want to buy big stakes in German firms to report their plans to the government and extending the scope of an existing law which defines only the defence industry as "strategic".

REACTION TO CREDIT CRUNCH

The government will likely discuss the impact of the U.S. subprime mortgage market problems and related turbulence in financial markets. Merkel has said recent events mean more transparency is needed, particularly for hedge funds.

MINIMUM WAGE

The central point of disagreement in the coalition. A minimum wage for the postal sector has been agreed in a deal to end the domestic mail monopoly, but the SPD insists on a national minimum wage. The CDU is strongly against the idea.

AFGHANISTAN

The government wants to extend all three of Germany's mandates in Afghanistan. But large sections of the SPD oppose an extension of the Operation Enduring Freedom mandate, under which Germany can send up to 100 special forces for anti-terrorist operations. Parliament votes on Enduring Freedom in November and on the other two, less controversial, mandates in October.

SKILLED LABOUR SHORTAGE

The government plans to fight the skills gap with steps to encourage more young people to study and reduce drop-out rates. An early opening of the labour market to workers from the new EU states may also be discussed.

WORKER OWNERSHIP OF COMPANIES

The coalition wants to extend opportunities for workers to share in companies' profits. The SPD wants to create a national fund, but the CDU wants workers to be involved directly in their firms. A working group is trying to find a compromise.

SECURITY

The coalition is at odds over whether the Federal Crime Office should be allowed to monitor online communication secretly. The SPD has reservations and wants to wait for a constitutional court ruling in spring 2008.

TRANSRAPID

The government has signalled it wants to end a dispute with the Bavarian government over the financing of the first stretch of the Transrapid magnetic levitation rail line in Munich. Bavaria has said it will increase its financial support for the project if the federal government shoulders half the cost.

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