NZ set for fiercely fought poll

Prime Minister Helen Clark is confident she will win

A New Zealand party which could hold the balance of power in upcoming elections has ruled out forming a coalition with either main contender.

New Zealand First leader Winston Peters said he would not join any government.

But he did say he was open to a post-election deal to support the biggest party on some issues.

Opinion polls have shown Prime Minister Helen Clark's Labour Party and the main opposition National Party running neck and neck ahead of 17 September polls.

Mr Peters said his party would vote on legislation "issue by issue".

"NZ First does have unwavering principles that are not for sale," Mr Peters said in a speech. "It is then for Helen Clark and [National Party leader] Don Brash to consider which of these they are prepared to accept."

Polls swings

Opinion polls have been volatile in recent days, but suggest the vote will be close. The latest poll, released on Wednesday, showed Labour opening up a 45% to 36% lead.

Ms Clark said she was "very optimistic" for a win saying she had found Labour support "very, very solid" throughout campaigning.

Her left-of-centre government has been in power since 1999.

Ms Clark has criticised the US decision to go to war in Iraq, while Mr Brash has pledged to mend ties with Washington.

Mr Brash has also said that he could, in the future, review New Zealand's 1985 ban on nuclear weapons and nuclear-powered ships.

Regarding the economy, Mr Brash has promised tax cuts if he wins power, whilst Ms Clark has promised to keep building on New Zealand's economic strength and to raise living standards.