Setback

Israeli leader Benjamin Netanyahu narrowly won an election in which disgruntled voters catapulted a new centrist challenger into second place and he now faces the daunting task of building a coalition.

Tuesday's vote crystallised demands for attention to bread-and-butter issues over the ambitions of religiously fired hardliners and largely sidelined foreign policy issues such as thwarting Iran's nuclear plans and Palestinian aspirations.

The right-wing prime minister claimed victory after his Likud party and its ultranationalist Yisrael Beitenu ally took 31 of parliament's 120 seats, according to a near-final tally.

That made it the biggest single bloc, despite losing 11 of its previous seats. Overall, right-wing and religious parties emerged with roughly half the total, an erosion of the dominance Netanyahu had enjoyed during almost four years of deadlock in peacemaking with the Palestinians and jitters over Iran. Yesh Atid and Labour, which came third with 15 seats, tapped into secular middle-class resentment that tax-payers must shoulder what they see as the burden of welfare-dependent ultra-Orthodox Jews exempt from military conscription.

KEY PLAYERS

* LIKUD: Led by incumbent Prime Minister Benjamin Netanyahu. Likud holds tough positions in stalled talks with the Palestinians.

* Yisrael Beitenu: The far-right party is the most hawkish in Netanyahu's coalition. Its leader, Lieberman, has been indicted for fraud.

* Yesh Atid: Founded by former TV personality Yair Lapid, the party represents secular, middle-class interests and says less money should be spent on settlements and stipends for the ultra-Orthodox.

* Labour: A centrist party led by former broadcast journalist Shelly Yachimovich. Labor emphasises on closing Israel's economic gaps.

* Jewish Home: Representing modern Orthodox Jews, the party has surged in the polls on the back of a strong pro-settlement message and the appeal of its charismatic leader, millionaire Naftali Bennett.

* Hatnua: The party of ex foreign minister Tzipi Livni was formed recently as an alternative to voters distressed by the stalemate in peacemaking.

... contd.

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