Television projections showed Sharon could win a ruling but shaky majority in parliament with a right-wing, ultranationalist and religious parties, but such a coalition could harden his already tough line against the Palestinian uprising.

Labour Party leader Amram Mitzna, who also lost votes to the self-styled centrist Shinui party, conceded defeat in a telephone call to Sharon soon after voting ended and the two agreed to meet for talks.

Flag-waving Likud supporters burst into song and screamed "Ariel, Ariel" at the party's headquarters. Downcast Labour supporters gasped in dismay as the television projections were shown on a big screen at their headquarters.

President Moshe Katzav is now expected to ask Sharon, as the leader of the biggest party in parliament, to form a new government to tackle a deep economic crisis and the 28-month-old Palestinian uprising for an independent state.

The 74-year-old retired army general could face weeks of political wrangling to put together a stable coalition in a fragmented parliament if he seeks a broad-based coalition.

Before the vote, he made clear his preference was for a broad coalition including leftist parties, but Labour has said it will not join a Likud-led coalition.

"The public is saying clearly today that it supports the prime minister and his policies...along with the message that it is tired of elections every two years -- and that's why we need a broad coalition," Likud cabinet minister Limor Livnat said.

Yuval Steinitz, a senior Likud member, said: "It is going to be difficult to form a coalition, a solid and stable government."

A right-wing coalition could put Sharon at odds with his country's main ally, the United States, over issues such as building Jewish settlements on occupied land in the West Bank, as Washington prepares for possible war with Iraq.

RIGHT CRUSHES LEFT

The television projections after voting ended showed Likud winning 32 to 36 seats in the 120-seat Knesset and that Likud and the bloc of other right-wing, ultra-nationalist and ultra-Orthodox parties would have about 66 seats in parliament.

The centre-left Labour Party was shown winning only 17 to 19 seats, down from 25 and its worst performance at any election and a dramatic decline for the party that blazed the trail of Israeli-Palestinian peacemaking.

Its former partner in peace moves, the left-wing Meretz party, was shown winning 5 to 8 seats, down from 10.

The stridently secular Shinui surged into third place, with a projected 14 to 17 seats, buoyed by support for its campaign to reduce the power of ultra-Orthodox Jewish parties.

Shinui leader Tommy Lapid, 71, told cheering supporters^ Election officials said turnout among the 4.7 million registered voters was the lowest for a general election in Israel's history -- 68.5 percent compared to an average of 78 to 80 percent.

Unofficial near-final results were due early on Wednesday.

The future of peacemaking with the Palestinians will be shaped largely by which parties join a coalition.

Sharon will have 28 days to form a government but can be given up to 14 more days if, as expected, he finds it difficult to build a coalition. If Sharon fails, Katzav will ask another party leader to form a government.

Although Sharon has not brought the peace and security he promised when elected in February 2001 -- and few expect him to do so now -- he flaunted his credentials as a veteran general and experienced politician to convince Israelis he was the best person to lead them through such troubled times.

VIOLENCE ON ELECTION DAY

Sharon has said painful concessions are needed to make peace but in his election campaign offered no new ideas for ending a conflict in which more than 1,800 Palestinians and almost 700 Israelis have been killed since September 2000.

Troops killed four Palestinians, including three gunmen, in the West Bank on election day, and an explosion at a militant's house killed three Palestinians in the Gaza Strip.

The Palestinians, who are resisting nearly 36 years of Israeli occupation in the West Bank and Gaza, said Sharon's re-election would bring more hardship.

"This is a heavy blow to a peaceful settlement. The Israelis have committed a historical mistake which they and the Palestinians will regret," Palestinian Information Minister Yasser Abed Rabbo said.

Palestinians spent the day under a blanket travel ban imposed by the army in the West Bank and Gaza Strip, a measure they condemned as collective punishment.

Israelis voiced weariness. Many predicted Sharon would be unable to form a government that would hold together for long.

"I'm not voting because anyway in another two years we'll have elections again," said Arieh Geiger, a young Israeli.

Mitzna, 57, failed to generate support for his@conciliatory approach to the Palestinian uprising, advocating immediate peace talks and unilateral Israeli pullbacks from Palestinian areas if fresh negotiations failed.

Labour was divided by his policies and his position could be in jeopardy after the election.

Israel's battered financial markets, suffering from two years of bloodshed and a global slowdown, would prefer to see a secular unity government led by Likud, Labour and Shinui to address urgent budget cuts and economic reform.

(China Daily January 29, 2003)