Conservative boost in Norway poll

Norway's PM Jens Stoltenberg: A clear message from voters

OSLO, Norway -- Norway's opposition Conservatives have moved towards forming a coalition after the ruling Labour Party crashed to its worst election result in almost a century.

"Norwegians have voted for change ... I'm pretty sure that we'll find a solution," Conservative leader Jan Petersen told Reuters after voters made a historic swing away from Labour, the architect of Norway's high-tax welfare state.

Peterson said the Conservatives, who favour tax cuts, privatisations and cutbacks in Norway's social welfare spending, wanted talks with the centrist Christian People's Party which holds the balance of power between left and right.

Labour Prime Minister Jens Stoltenberg pledged to try to stay on even though voters slashed support for his Labour Party to 24.4 percent in Monday's vote from 35 percent in 1997.

Analysts said Petersen has the strongest chance of forming a stable government.

It was Labour's worst result since 1909, with many voters wanting some return for Norway's oil money bonanza.

Norway is the top non-OPEC oil exporter, pumping 3.2 million barrels per day -- worth about $7,000 per Norwegian per year.

Dissatisfaction with the government was also reflected in the turnout, the lowest since the 1920s at 74.5 percent.

After the results, Labour will remain the biggest party in parliament but the Conservatives, who have been out of power since 1990, surged to 21.3 percent of the vote from 14.3 percent in 1997.

Norway's fragmented parties need to decide on a government before parliament meets on October 10.

The Norwegian crown gained on the swing to a centre-right majority away from the centre-left, up from 7.9525 per euro in early afternoon against 7.9850 before the results on Monday.

Kjell Magne Bondevik, a Lutheran priest and former prime minister of the Christian People's Party, declined to say who he would support. But he has been far warmer in the past to Petersen than to Stoltenberg.

"Our goal is a change of power, but we won't cooperate with anyone at any price," he told Reuters. He said his party would meet in coming days to discuss the parliamentary tangle.

Bondevik ruled for two-and-a-half years before his three-party centrist government was ousted by Stoltenberg in March 2000.

His party holds the balance of power with 12.5 percent, according to figures after 99.3 percent of the vote was counted.

The Conservatives will have 38 seats in the 165-member parliament and can count on informal support from the 26 seats of the far-right anti-immigrant Progress Party.

By entering a coalition with Bondevik's 22 members, the centre-right would have an informal majority of 86. To win over Bondevik, Petersen might even offer him the job of prime minister and take a back seat as foreign minister.

Reuters reported that the daily Verdens Gang portrayed Bondevik, whomade political history as prime minister when he took time off for depression, as the joker in a pack of cards on its front page. The daily Dagbladet agreed that "all power" lay with him.

"Voters gave a clear message that they are not happy with Labour," Stoltenberg told Reuters after voting ended. "We're not pleased either but voters have not elected a parliament with a clear alternative."

However Stoltenberg said he would remain in office until he could determine whether Labour had enough parliamentary support to continue in office.

"Parliament will meet at the start of October and by then we must have a clarification of what basis there is either for a government in which Labour takes part ... or whether a majority in parliament has decided otherwise," he told party supporters.

Weeks of political horse trading are now likely before the exact form of the new government becomes known.

Analysts said the results appeared to reflect an increasing weariness among Norwegians of paying high taxes -- nearly 50 percent of their income, according to newspaper reports -- but complaining about shortcomings in the welfare state largely built up by Labour.

Prime Minister Jens Stoltenberg became PM of one of the world's richest nations last year at the age of 41 after he and his Labour Party ousted a three-party moderate coalition led by Christian Democrat Kjell Magne Bondevik in a parliamentary showdown.

Norway, with some 4.5 million people, keeps billions of kroner (dollars) a year of surplus revenue in the Government Petroleum Fund for foreign investment to avoid overheating the nation's economy.

But rival parties have blasted Labour for clinging to oil wealth, rather than using it to ease some of Europe's highest taxes and to end shortages in health care, education, child care and other services.

The campaign had focused on high taxes, complaints about shortages of services in the Scandinavian nation's cradle-to-grave welfare state and spending more oil wealth.

Norway is the world's second-largest oil exporter after Saudi Arabia, so it is possible the election results will influence prices at global gas pumps over the next four years.

However, there is such broad agreement among the parties on key issues -- economic, oil and foreign policy and NATO membership -- that few expect sweeping policy changes.

Norwegian law does not allow parliament to be dissolved and new elections called, so the parties must now seek to form a government that has a chance of continuing in office.