BELGRADE (Reuters) - Serbia's ruling liberals and right-wing opposition were tied for control of the Balkan country on Sunday after knife-edge elections in which the party of late Serb strongman Slobodan Milosevic emerged as kingmaker.
The opposition Serbian Progressive Party (SNS), led by former ultranationalist allies of Milosevic, claimed the narrowest of victories in the parliamentary election over the ruling Democratic Party, playing to voter anger over economic stagnation.
The SNS said it would open coalition talks without delay.
But the results of smaller parties suggested the Democratic Party, in power since Milosevic's ouster in 2000, was well-placed to reform the outgoing, reformist coalition that has steered Serbia to within a whisker of talks on joining the European Union.
The two biggest parties will also fight it out for control of the presidency, when SNS leader Tomislav Nikolic and Boris Tadic of the Democrats go head-to-head in a run-off vote on May 20.
With some 25 percent, Nikolic had a slight lead over Tadic in the first round, according to preliminary official results, but Tadic is expected to pick up more votes when the election goes down to two candidates.
In the more important parliamentary election, the SNS won 24.7 percent, ahead of the Democrats on 23.2 percent, according to a projection by pollsters CESID.
The Democrats polled 38 percent in the last election in 2008, punished this time for an economic downturn that has driven unemployment to 24 percent.
But with 16.6 percent of the vote, the third-placed Socialist Party (SPS), once led by Milosevic, will likely cast the crucial vote to decide who forms Serbia's next coalition government, and is widely tipped by analysts to pick the Democratic Party.
The party doubled its share of the vote from the last parliamentary election in 2008. SPS leader Ivica Dacic, formerly Milosevic's spokesman, made clear his support would not come cheap.
"Maybe Serbia doesn't know today who will be president, but it knows who will be prime minister," he told reporters, to applause from supporters.
"Whoever wants to talk to us ... will have to understand that we have risen from the ashes." There were fireworks and trumpets on the terrace of the party headquarters.
Under the constitution, the prime minister is more powerful than the president.
"There is huge blackmailing potential for the SPS," said analyst Zoran Stojilkovic. "They are closer to the Democrats and they will have huge demands."
"The likeliest outcome is that the pro-European coalition will continue," he said.
Since Milosevic, Serbia has teetered between pro-Western reformists and unrepentant, pro-Russian nationalists. But Sunday's elections were marked by an unprecedented pro-European consensus between the major political blocs.
Nikolic, formerly part of the ultranationalist Radical Party, was once demonized by the West as Milosevic's spiritual heir but says he now shares the goal of taking Serbia into the EU.
The Radicals were in government with Milosevic when NATO bombed Serbia in 1999 to halt the massacre and expulsion of ethnic Albanians from Kosovo. But after repeated election defeats, Nikolic broke away in 2008.
"We have won the most votes," he told a news conference after voting ended. "We want to start negotiations tomorrow on forming a new government."
But the result, if it stands, will mark an upset after opinion polls ahead of the vote suggested the SNS would beat the Democratic Party by a much wider margin.
Under the Democratic Party, Serbia closed a dark chapter with the arrest and extradition of Bosnian Serb genocide suspects Radovan Karadzic and Ratko Mladic, and in March became an official candidate for EU membership.
But there is widespread anger at the outgoing government over the country's economic woes, fueled by the crisis in the euro zone, the Balkan region's main trading partner. The average Serb takes home 380 euros per month.
Fellow ex-Yugoslav republic Croatia joins the EU next year, driving home for many Serbs just how far they have fallen behind. The Democratic Party has also been dogged by accusations of cronyism after more than a decade in power.
"The Democrats had their chance and they failed miserably so now it's time for a change," said 59-year-old Belgrade nurse Olga Nikolic, who voted for the opposition.
(Writing by Matt Robinson; editing by Andrew Roche)