By Patrick Lannin and Simon Johnson
STOCKHOLM, Sept 19 (Reuters) - Sweden's centre-right government has won re-election but lost its overall majority in parliament after an anti-immigrant party earned its first ever seats in a Sunday election, preliminary results showed.
Analysts had said before the vote that a hung parliament, with Prime Minister Fredrik Reinfeldt having no overall majority, would unsettle investors, but the Swedish crown firmed slightly after the results.
Reinfeldt has said he is prepared to lead a minority government but could also approach the opposition Green Party for support.
Official preliminary results showed the centre-right coalition government winning 173 seats in the 349-seat parliament and the Social Democrat-led centre-left with 156 seats.
Reinfeldt, who has benefited from one of Europe's strongest economic recoveries and sound public finances, would be the first sitting centre-right leader ever to win re-election in Sweden. The Social Democrats, architects of Sweden's welfare model, ruled for much of the last century.
However, the big news of the night for a country which has long prided itself as being one of the most tolerant in Europe was that the anti-immigrant Sweden Democrats looked set to win 20 seats, their first entry to the national parliament.
'If this outcome stands we will have a scenario that most Swedish voters wanted to avoid, that is that we have a xenophobic party holding the balance of power,' said Ulf Bjereld, a political scientist at Gothenburg University.
The rise in support for the Sweden Democrats has followed a move away from the party's skinhead roots and matches developments in other European countries.
The Sweden Democrats deny they are racist but both main blocs have ruled out cooperating with them.
'Today we have written political history together, I think that's fantastic,' jubilant Sweden Democrat leader Jimmie Akesson told his chanting supporters.
Jan Haggstrom, chief economist at Handelsbanken, said that even a minority Reinfeldt government could manage well and he saw little chance that the centre-left opposition would link up with the Sweden Democrats on key parliamentary issues.
'We have such strong public finances..., it would take something really spectacular for people to start worrying ... and start selling Swedish government paper,' he said.
The centre-left opposition focused its campaign on people who have suffered due to cost-cutting welfare reforms under the Alliance of Reinfeldt's Moderate Party, the Liberals, Centre and Christian Democrats.
INSPIRED BY DANISH PARTY
The Sweden Democrats have been inspired by the success of the People's Party in neighbouring Denmark, which provides vital parliamentary support for the government.
The party, which wants to curtail immigration and criticises Muslims and Islam as un-Swedish, already has many seats in local councils. A breakthrough at national level would match a similar rise elsewhere in Europe for anti-immigrant parties.
Sweden has been among the most welcoming of European Union countries to immigrants seeking asylum or refugee status.
It took in people after the Balkan wars of the 1990s and was a favourite destination for Iraqis after the U.S. invasion.
Immigrants account for 14 percent of Sweden's population, just above the 12.4 percent average for northern Europe, according to United Nations figures.
In the election, voters were choosing between Reinfeldt's model of a leaner welfare state with more income tax cuts and privatisations, and an opposition platform that wants the rich to pay more to fund schools, hospitals and care for the elderly.
(Additional reporting by Ilze Filks, Simon Johnson and Mia Shanley; Editing by Noah Barkin and David Stamp) Keywords: SWEDEN ELECTION/ (Stockholm newsroom, patrick.lannin@reuters.com, patrick.lannin.reuters.com@reuters.net, +46 70 721 1007) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
STOCKHOLM, Sept 19 (Reuters) - Sweden's centre-right government has won re-election but lost its overall majority in parliament after an anti-immigrant party earned its first ever seats in a Sunday election, preliminary results showed.
Analysts had said before the vote that a hung parliament, with Prime Minister Fredrik Reinfeldt having no overall majority, would unsettle investors, but the Swedish crown firmed slightly after the results.
Reinfeldt has said he is prepared to lead a minority government but could also approach the opposition Green Party for support.
Official preliminary results showed the centre-right coalition government winning 173 seats in the 349-seat parliament and the Social Democrat-led centre-left with 156 seats.
Reinfeldt, who has benefited from one of Europe's strongest economic recoveries and sound public finances, would be the first sitting centre-right leader ever to win re-election in Sweden. The Social Democrats, architects of Sweden's welfare model, ruled for much of the last century.
However, the big news of the night for a country which has long prided itself as being one of the most tolerant in Europe was that the anti-immigrant Sweden Democrats looked set to win 20 seats, their first entry to the national parliament.
'If this outcome stands we will have a scenario that most Swedish voters wanted to avoid, that is that we have a xenophobic party holding the balance of power,' said Ulf Bjereld, a political scientist at Gothenburg University.
The rise in support for the Sweden Democrats has followed a move away from the party's skinhead roots and matches developments in other European countries.
The Sweden Democrats deny they are racist but both main blocs have ruled out cooperating with them.
'Today we have written political history together, I think that's fantastic,' jubilant Sweden Democrat leader Jimmie Akesson told his chanting supporters.
Jan Haggstrom, chief economist at Handelsbanken, said that even a minority Reinfeldt government could manage well and he saw little chance that the centre-left opposition would link up with the Sweden Democrats on key parliamentary issues.
'We have such strong public finances..., it would take something really spectacular for people to start worrying ... and start selling Swedish government paper,' he said.
The centre-left opposition focused its campaign on people who have suffered due to cost-cutting welfare reforms under the Alliance of Reinfeldt's Moderate Party, the Liberals, Centre and Christian Democrats.
INSPIRED BY DANISH PARTY
The Sweden Democrats have been inspired by the success of the People's Party in neighbouring Denmark, which provides vital parliamentary support for the government.
The party, which wants to curtail immigration and criticises Muslims and Islam as un-Swedish, already has many seats in local councils. A breakthrough at national level would match a similar rise elsewhere in Europe for anti-immigrant parties.
Sweden has been among the most welcoming of European Union countries to immigrants seeking asylum or refugee status.
It took in people after the Balkan wars of the 1990s and was a favourite destination for Iraqis after the U.S. invasion.
Immigrants account for 14 percent of Sweden's population, just above the 12.4 percent average for northern Europe, according to United Nations figures.
In the election, voters were choosing between Reinfeldt's model of a leaner welfare state with more income tax cuts and privatisations, and an opposition platform that wants the rich to pay more to fund schools, hospitals and care for the elderly.
(Additional reporting by Ilze Filks, Simon Johnson and Mia Shanley; Editing by Noah Barkin and David Stamp) Keywords: SWEDEN ELECTION/ (Stockholm newsroom, patrick.lannin@reuters.com, patrick.lannin.reuters.com@reuters.net, +46 70 721 1007) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.