UPDATE 2-German EU vote points to Merkel-FDP alliance

* Points to conservative-FDP coalition in federal election

* Social Democrats fall to historic low

(Recasts with latest projections, quotes, analyst)

By Madeline Chambers

BERLIN, June 7 (Reuters) - Chancellor Angela Merkel's conservatives remained Germany's strongest party despite registering losses in European polls on Sunday, boosting her bid to retain power in September's federal election.

Merkel's favoured coalition partner, the pro-business Free Democrat party (FDP), was the biggest winner in Sunday's vote, pointing to a possible alliance between the two centre-right parties after the autumn election.

"If these results were repeated in September, Merkel could just about form a coalition with the FDP, " said Dietmar Herz, a politics professor at Erfurt University.

Support for the Social Democrats (SPD), who have shared power with Merkel's conservatives in a loveless coalition since 2005, languished at record lows in a blow to Foreign Minister Frank-Walter Steinmeier's hopes of becoming chancellor.