Netanyahu edges win in close elections

The results defied forecasts that Israel's next government would veer sharply to the right, but essentially made little difference in Israel's labyrinthine politics.

Israeli media said that with nearly all votes counted, the broadly centre-left and right-wing blocs each had 60 of parliament's 120 seats.

The country's electoral system makes it virtually impossible for any party to form a government alone and it has been governed by coalitions since its inception.

Mr Netanyahu, who called early elections three months ago expecting an easy victory, will likely be given the first chance to form a coalition for the next government becausehis party won the highest individual total of seats.

His Likud-Yisrael Beitenu alliance polled strongest, winning 31 parliamentary seats.

But that is still 11 fewer than the 42 it held in the outgoing parliament.

However, the missing 11 seats merely went to the Jewish Home party of millionaire Naftali Bennett, which can be expected to fall in comfortably with Mr Netanyahu's coalition.

The shock came from the new centrist Yesh Atid party, which had been projected to capture about a dozen seats but won 19, making it the second-largest in the legislature.

Yesh Atid leader Yair Lapid has said he would only join a government committed to sweeping economic changes and a serious push to resume peace talks with the Palestinians, which have languished throughout Mr Netanyahu's four-year tenure.

However the goal of a broad coalition will not be an easy one and will force Mr Netanyahu to make some difficult decisions.

In an interview last week, Mr Lapid said he would not be a "fig leaf" for a hard-line agenda on peacemaking.

And leading party member Yaakov Peri said today that Yesh Atid will not join unless the government pledges to begin drafting the ultra-Orthodox into the military, lowers the country's high cost of living and returns to peace talks.

"We have red lines. We won't cross those red lines," Mr Peri said.

But that is unlikely to sit easily with Mr Netanyahu's traditional right-wing coalition allies.

Building a new coalition may forge some unlikely alliances.