* Much to do before coalition deal - Merkel
* Parties to hold marathon weekend talks
* Deal agreed on electric cars, data networks
* Labour rights, healthcare main sticking points (Updates with migration deal, adds details)
By Thorsten Severin and Michelle Martin
BERLIN, Feb 2 (Reuters) - Chancellor Angela Merkel said her conservatives and their would-be partners, the Social Democrats (SPD), had much to do before agreeing to form a government, with the parties haggling over labour rights and healthcare though they put aside an argument over migration.
The parties became embroiled in another dispute over migration on Friday, with some SPD members saying they wanted to revisit January's coalition blueprint that said the parties did not expect annual migration to exceed 220,000 per year because they were annoyed that Merkel's CSU Bavarian allies seemed to be considering this as an upper limit.
But SPD deputy Ralf Stegner later said the parties had reached a deal. In an apparent defeat for the SPD, the wording of that migration prediction remained the same - as pushed for by the CSU, which calls for a migrant cap.
Stegner said the figure described "expected migration numbers" and beyond that the parties stood by the right to asylum enshrined in Germany's constitution.
He said the SPD had had to make compromises: "We can't make progress on our issues without giving something in return."
But he trumpeted an agreement on a "modern and transparent immigration law" as a success for the migrant-friendly SPD. The parties agreed to encourage skilled migrants to go to Germany by considering criteria such as qualifications, age and language skills.
The parties also secured agreements on less contentious issues, but as she arrived for talks Merkel said they faced divisions in crucial areas, adding: "We have goodwill to overcome them, but there is still a lot of work ahead for us."
The two camps aim to finalise a deal for four more years of a "grand coalition" by the end of the weekend or early next week, some four months after an inconclusive election plunged Germany into unaccustomed political uncertainty.
The parties have agreed some eye-catching measures, including a 50 percent tax write-down for fleet electric cars and a 12-billion-euro public investment programme to improve sluggish data networks, documents seen by Reuters showed.
In the field of labour rights, where the SPD wants to signal to its members that it has set its stamp on the deal, the SPD and conservatives agreed to the right for employees in companies with more than 45 employees to move seamlessly back and forth between full- and part-time work.
But long lines of text highlighted in yellow showed the parties had yet to decide on the exact wording of that agreement.
Other agreements included to raise child benefits by 25 euros per child per month and senior SPD member Katarina Barley said there would be a women's quota for management in the civil service after the last government focussed on this for firms.
The parties also agreed to give German authorities the ability to deprive people with dual citizenship of their German citizenship if they fight abroad for an extremist organisation.
They also said they wanted to start allowing collective lawsuits. Consumer associations and politicians had called for class-action lawsuits to be made possible during the Volkswagen diesel emissions scandal.
As he arrived for talks, SPD leader Martin Schulz said his party would insist on more progress in labour law and healthcare, where the party hopes to reduce difference in the service experienced by the privately and publicly insured.
They made some progress by agreeing to boost funds for hospitals for restructuring, digitalisation and new technologies.
The centre-left SPD has sagged even further in opinion polls since suffering its worst result of the postwar era in the Sept. 24 election.
Many SPD activists, who must ratify any coalition deal in a postal ballot, would prefer to see their party reinvent itself in opposition rather than join another coalition with Merkel after serving as junior partner from 2013 to 2017. But such an alliance is Merkel's best bet of securing a fourth term.
Several politicians from both blocs suggested they may need until Monday and Tuesday to reach an agreement, with Schulz stressing they were not under time pressure, but Horst Seehofer, Merkel's Bavarian ally, said: "So far, there is no reason to expect we will need longer than Sunday." (Writing by Thomas Escritt and Michelle Martin; Additional reporting by Markus Wacket, Thomas Escritt, Sabine Siebold, Hans-Edzard Busemann; Editing by Janet Lawrence)