By Madeline Chambers and Paul Carrel
BERLIN (Reuters) - German Chancellor Angela Merkel said on Tuesday things were moving in the right direction after the EU agreed a draft deal with Turkey to stem the flow of migrants to Europe, a touchstone issue for voters in state elections on Sunday.
The deal is a crucial sign of progress for Merkel, battling domestic resistance to get a European plan to tackle a crisis that brought over 1 million migrants to Germany last year.
"Overall, things are going in the right direction," Merkel told SWR radio, also trying to assuage worries that Turkey is blackmailing Europe, "No. We are seeking a balance of interests," she said.
EU leaders welcomed an offer by Ankara to take back migrants crossing into Europe and agreed in principle to its other demands but delayed a deal until March 17-18..
"Finally there are concrete steps toward a joint European refugee policy," said Sigmar Gabriel, leader of the Social Democrats (SPD), junior partner in Merkel's ruling coalition.
The CDU and the SPD have lost support before Sunday's votes in Baden-Wuerttemberg, Rhineland-Palatinate and Saxony-Anhalt, but Merkel's own rating bounced back last week after hitting a 4-1/2 year low in February.
Forsa pollster Manfred Guellner said the draft deal would help shore up her support among Germans, although it would widen the divide between the CDU and SPD with the anti-immigration AfD party and Bavaria's conservative Christian Social Union (CSU).
"The majority will say 'That is Merkel. She is toiling away again, she is engaged, she is trying to convince others, and she is on the right path'," Guellner said.
But pollsters draw a clear distinction between support for Merkel as chancellor and for her party in the state votes.
The anti-migrant AfD is expected to do well after it scored 13.2 percent in local elections in the western state of Hesse at the weekend to become the third biggest party in councils there.
Reflecting wide scepticism among Bavarian conservatives about Turkey joining the EU, CSU lawmaker Hans-Peter Friedrich told SWR: "We mustn't put ourselves in the hands of the Turks."
(Writing by Madeline Chambers and Paul Carrel; Editing by Catherine Evans)