Coalition talks after Croatia poll

Both sides in Croatia's close-fought parliamentary elections have begun talks to form a government.

However, the ruling conservatives appeared better equipped to muster a coalition to lead the ex-Yugoslav country into the European Union.

Both Prime Minister Ivo Sanader's Croatian Democratic Union and opposition centre-left Social Democrats fell short of the estimated 77 deputies required for a majority in parliament in Sunday's election and began wooing allies. Both leaders claimed they would make it but analysts believe Sanader's party has more chance.

Sanader's party, known by its acronym HDZ, was to get 61 deputies and the Social Democrats 56, the state-run Electoral Commission said with 97% of votes counted. HDZ is likely to add five to six seats won by Croats living abroad, HDZ's traditional voters' base, giving him at least 66 seats. The Social Democrats, or SDP, could get a total of 66 deputies as well with its two certain leftist allies, but that alliance would require some deals and concessions.

President Stipe Mesic said he would give a mandate to the one that provides "convincing evidence" that it has a majority in parliament.

Croatia's pro-Western course is not at stake and the new government is expected to lead the ex-Yugoslav nation into the EU by 2010.

Sanader declared victory and his spokesman, Ratko Macek said the HDZ has "greater coalition capital. We should get a mandate."

The HDZ said European and regional leaders, including German chancellor Angela Merkel and the EU's official in charge of the bloc's expansion, congratulated Sanader.

The Social Democrats, or SDP, was not giving up and its spokeswoman, Gordana Grbic said: "Let's wait for the final results and also the outcome of our talks with potential partners."

The party leader, Zoran Milanovic, said earlier the party was "starting to form" a new government.