Hungary socialists in pole place

Prime Minister Orban, right, and opposition leader Medgyessy, left, are fighting similar campaigns

BUDAPEST, Hungary -- Hungary's Socialist opposition has won a tight first round of national elections, easing fears the far right could hold the balance of power ahead of European Union entry.

The Hungarian Socialist Party is now looking to topple Prime Minister Viktor Orban's conservative alliance, in a second round of voting in two weeks, and form a majority centre-left government with the liberal Free Democrats (SZDSZ), as they did in 1994-98.

With a record turnout of over 71 percent, and virtually all votes counted, the Socialists had polled 41.3 percent against 40.3 percent for Orban's Fidesz.

Crucially, the extreme right Justice & Life Party (MIEP) scored just 4.47 percent, below the minimum five percent entry threshold into the 386-seat Parliament.

Financial markets and EU diplomats had feared the centrist Orban might invite MIEP to share power in a second term, a move that could have caused a rift with Brussels as EU negotiations enter a crucial phase.

With SZDSZ support, Socialist leader Peter Medgyessy holds the trump cards as the two allies can agree tactical candidate withdrawals to head off centre-right gains in a second round.

Under Hungary's complex voting system, a total of 185 seats were decided in Sunday's first round, with the left taking 98 and Fidesz 87. Another 201 seats remain to be won, mostly in constituency run-offs between the two top candidates from the first round.

Speaking at party headquarters, Medgyessy said: "This was a good round for us."

In a swipe at Orban's social policies, Medgyessy declared: "I promise I will be prime minister of 10 million Hungarians and not two groups of five million."

He said he would meet Free Democrat leaders in the next few days to discuss tactics for the second round.

Orban, 38 and seeking to become Hungary's first premier since the 1989 fall of communism to win re-election, urged his party faithful to fight on, reminding them that the Socialists led by four points after the 1998 first round, but still lost.

"From the morning, tough work will begin, my friends. The campaign battle must be continued even more fiercely," he said.

The vote has been seen as a stern test of Orban's growing nationalist tone, which had stirred ethnic tensions in the region and prompted concern in the EU and on financial markets.

Hungary had to cede two-thirds of its territory and around a third of its people to neighbouring states after it was on the losing side in World War One.

Orban has called for the "reunification of the nation across the borders," a ploy experts say aims to woo far-right voters.

Both major parties have promised lower taxes, higher wages, more jobs and houses and urgent healthcare and pension reforms. Both would prioritise Hungary's smooth EU accession.

A runoff among the top three candidates is set for April 21.

A total of 8.1 million people are entitled to vote in Hungary's parliamentary elections, which are held every four years. Hungary held its first free elections in 1990 after the collapse of communism across Eastern Europe in 1989. There have been four parliamentary elections since then.

-- Managing Editor, MTV Hungarian Television, Gyula Vilagi contributed to this report.