Iceland votes in tight elections

Votes are being counted in a general election in Iceland, with observers expecting a close result.

The conservative Independence Party of Prime Minister Geir Haarde looks set to remain the biggest in parliament.

But his coalition partner - which supports the interests of major industry - is expected to lose seats.

Voters are concerned about the impact on the environment of plans to expand aluminium smelting. This could open the door to a new centre-left coalition.

Centre-left parties have called for a moratorium on aluminium smelter development.

The partnership between Mr Haarde's Independence Party and the Progress Party want aluminium giants to keep building smelters.

Coalition politics

The main opposition parties - the Left Green and Social Democrats - are calling for a moratorium on development until the environmental and economic impact of the latest projects is clear.

The BBC's Nordic correspondent, Julian Isherwood, says that there is little doubt that Mr Haarde's conservative Independence Party will remain the largest party in parliament.

All of the polls suggest a vote of some 35% for the party that has kept the Icelandic economy strong and improving, our correspondent says.

But in Iceland that does not mean he will remain in power, he adds.

Icelandic politics, as in the rest of the Nordic region, is based on coalition building and Mr Haarde's current coalition partner, the Progress Party has continuously dropped in voter sympathies.

If the opinion polls prove correct and the government does not win a clear majority, that would mean a lengthy period of government negotiations with the possibility of a centre-left government emerging to include the Social Democrats.