By Erik Kirschbaum
BERLIN, Aug 3 (Reuters) - Chancellor Angela Merkel's challenger Peer Steinbrueck suffered another setback to his gaffe-prone campaign when thousands of Social Democratic Party's (SPD) posters dissolved in the rain, Bild daily reported on Saturday.
The posters - printed on ecologically friendly, recyclable paper and part of a national campaign Steinbrueck personally launched on Tuesday - fell apart when heavy rain hit the states of Saarland and Hesse.
The SPD had no immediate comment. Bild quoted an SPD official saying: "The whole thing is incredibly embarrassing."
Steinbrueck said on Tuesday he was not afraid to attack Merkel personally when he unveiled a separate set of posters mocking her, a risky tactic in a country where negative campaigning is taboo. The destroyed posters just showed SPD candidates.
Campaign posters play an extremely important role in German elections with parties blanketing the country with millions in the weeks before the election. Merkel's party will present its poster on Sunday.
Steinbrueck, fighting an uphill battle to oust Merkel in the Sept. 22 election, had hoped his campaign could finally get off the ground with her on holiday until mid-August.
His centre-left SPD is stuck about 13 points behind Merkel's conservatives. But the SPD could still win enough, together with his coalition allies the Greens, to stop Merkel returning to power with her Free Democrat (FDP) partners.
Analysts believe the two biggest parties - Merkel's and the SPD - may end up in a "grand coalition" if the FDP falters.
The SPD had high hopes of beating Merkel when Steinbrueck was nominated last year. He was seen as a no-nonsense, straight-talking conservative voice in the left-leaning SPD who could siphon away middle-of-the-road voters from Merkel.
Just two months ago Steinbrueck sacked his chief spokesman and his campaign has been plagued by blunders all along.
He got mired in a row in October over earning 1.25 million euros ($1.66 million) in fees as an after-dinner speaker and he botched the ensuing public debate about it.
And just as that issue was fading, Steinbrueck blundered again, telling the Frankfurter Allgemeine Sonntagszeitung that German chancellors were underpaid and that Merkel was so popular because she was a woman. ($1 = 0.7528 euros) (Additional reporting by Madeline Chambers; Editing by Louise Ireland)