Netanyahu claims victory in Israel election after hard right shift

(Reuters) - Prime Minister Benjamin Netanyahu claimed victory in Israel's election on Tuesday after exit polls showed he had erased his center-left rivals' lead with a hard rightward shift that saw him disavow a commitment to negotiate a Palestinian state.

Difficult coalition talks still lie ahead. Isaac Herzog, Netanyahu's chief opponent and head of the center-left Zionist Union, said "everything is still open" and that he had already spoken to party leaders about forming a government.

But after days in which Zionist Union appeared poised to defeat Netanyahu's Likud, the exit polls put the two parties in a dead heat. Netanyahu could have the easier path to forming a cabinet, which would put him on course to become Israel's longest serving leader.

He pulled off the feat with a pitch for ultranationalist votes in the final days of the hard-fought campaign, using tactics that could deepen a feud with the White House, at least as long as President Barack Obama remains in office.

Netanyahu has focused on the threat from Iran's nuclear program and militant Islam. But many Israelis had said they were tiring of the message, and the center-left had campaigned on social and economic issues, surging in polls as election day neared.

Two television exit polls, for Channel 10 and Channel 1, said Likud and Zionist Union had each secured 27 seats in the 120-member Knesset. Channel 2 gave Netanyahu a narrow edge, with 28 to 27 for his challenger after polling stations closed.

"Against all odds: a great victory for Likud, a great victory for the national camp led by Likud, a great victory for the people of Israel," Netanyahu wrote on his official Twitter account.

Opinion polls in the run-up to the ballot had shown Zionist Union with a three to four-seat advantage over Likud, suggesting the public had warmed to Herzog, who won over voters with flashes of wit after enduring being lampooned for his short stature and reedy voice.

Final results are not expected until early on Wednesday morning.

COALITION BLOCS

A new centrist party led by former communications minister Moshe Kahlon could be the kingmaker in coalition talks. After the balloting ended, he said did not rule out a partnership with either Likud or Zionist Union.

The exit polls gave right-wing and religious parties - Netanyahu's traditional partners - about 54 seats, and left-leaning factions, 43 - both figures still short of a governing majority in the 120 seat parliament.

Turnout was around 72 percent, higher than the last election in 2013.

No party has ever won an outright majority in Israel's 67-year history, and it may be weeks before the country has a new government. Netanyahu will remain prime minister until a new administration is sworn in.

Naftali Bennett, leader of the ultranationalist Jewish Home party, said he had spoken with Netanyahu within minutes of the exit polls and agreed to open "accelerated" coalition talks with him.

"The nationalist camp won," Bennett, who advocates annexing parts of the occupied West Bank, told supporters.

But Zionist Union could find a lifeline from Kulanu and from Arab parties that united for the first time in a joint list of parliamentary candidates and came in third in the exit polls.

While they are unlikely to join a government, the Arab parties could give a center-left coalition tacit support and create a block against Netanyahu.

If the center-left is to assemble a government, it will also need the support of ultra-Orthodox parties, which the polls said would win 13-14 seats.

After the final results are in, and following consultations with political parties, it will be up to President Reuven Rivlin to name the candidate he deems best placed to try to form a coalition. The nominee will have up to 42 days to do so.

Ramping up his bid for right-wing votes, Netanyahu on election day accused left-wing groups of trying to remove him from power by busing Arab Israeli voters to polling stations, a statement that drew a sharp rebuke from Washington.

"We’re always concerned, broadly speaking, about any statements that may be aimed at marginalizing certain communities,” State Department spokeswoman Jen Psaki said.

Some political rivals even accused Netanyahu of racism over the remarks.

The Obama administration has been angry at Netanyahu since he addressed the U.S. Congress two weeks ago at the invitation of Republican lawmakers, to oppose ongoing U.S. nuclear negotiations with Iran.

In the last days of campaigning as he sought to persuade supporters of smaller right-wing parties to "come home" to Likud, Netanyahu promised more building of Jewish settlements and said the Palestinians would not get their own state if he were re-elected.

Those sweeping promises, if carried out, would further isolate Israel from the United States and the European Union, which believe a peace deal must accommodate Palestinian demands for a state in the occupied West Bank, East Jerusalem and Gaza.

When Netanyahu called the election in December, two years early, he looked set for an easy victory. But in the final weeks there has been a sense that change could be in the air. Some voters have talked of Netanyahu fatigue.