NZ parties begin coalition talks

Helen Clark faced a resurgent National Party opposition

New Zealand's Prime Minister Helen Clark has begun talks with potential coalition partners after securing a narrow win in the country's election.

Ms Clark's ruling Labour Party won 50 seats in parliament, just one more than the opposition National Party.

She will run a caretaker government until 1 October while holding talks with minor parties.

The National Party, which pledged to cut state aid to Maori communities, will also try to form a coalition.

If Ms Clark succeeds in building a workable coalition in New Zealand's reformed 122-seat parliament, she would become the first Labour prime minister to win three successive terms in office.

With 50 seats, Labour remains 11 seats short of a majority over the National Party, which won 49 seats.

National Party leader Don Brash has refused to admit defeat, and said that in the coming days and weeks he would "endeavour to put together a National-led government".

Division

"You are looking at Labour working with a range of small parties to get something that is sustainable, durable and can keep New Zealand growing," said Ms Clark, 55.

ELECTION RESULTS Labour - 41% (50 seats) National - 40% (49) New Zealand First - 6% (7) Greens - 5% (6) United Future - 3% (3) Maori - 2% (4) Act - 1.5% (2) Progressive Party - 1% (1)

"I've run a stable minority government for the last six years and I hope to form one again."

Ms Clark said the election campaign had exposed "deep divisions" within New Zealand society.

During the campaign she appealed to voters by pointing out that her party has kept the economy in good shape.

Mr Brash campaigned on a promise to strengthen trade ties with the US and scrap some welfare and voting rights enjoyed by New Zealand's Maori people.

His party doubled its share of the vote, but analysts say it took votes away from conservative parties likely to consider entering a coalition.

Profile: Don Brash Profile: Helen Clark

Labour already has the support of the Greens and the Progressive Party and can expect the backing of the indigenous Maori Party.

Mr Brash has only been in parliament for three years, but has shaken up the establishment by vowing to soften New Zealand's ban on nuclear-powered vessels in its ports, and to discard some privileges for the Maori.

He says the long-standing nuclear ban is stifling relations with the US, and its renegotiation could help with a free trade deal.

Mr Brash has called for tax cuts, and the removal of seven seats reserved for Maori MPs and welfare policies aimed at the indigenous group.