Lithuanian leader to name Social Democrat as PM

VILNIUS (Reuters) - Lithuanian President Dalia Grybauskaite said on Monday she would choose a center-left opposition leader as prime minister, ending a political stalemate after elections last month.

She had earlier refused to back Social Democrat head Algirdas Butkevicius as prime minister as she objected to his plan to include the Labour Party, which has been accused of electoral fraud, in his coalition.

But she told reporters on Monday it was clear the Social Democrats were the only ones able to form a majority coalition in parliament.

She said she would formally nominate Butkevicius at a parliament sitting on Tuesday, though she still expressed dissatisfaction at his choosing a coalition partner who was "sitting on the bench of the accused".

Butkevicius told reporters the president had demanded that no ministers should be members of the Labour Party.

Butkevicius is to form a coalition with the Labour Party, the Order and Justice Party, led by a former impeached president, and a party representing the Polish minority.

The coalition will have 86 seats in the 141-seat parliament.

Though the parties campaigned on pledges to ease austerity including a rise in the minimum wage and some cuts in value added tax, economists have said the new government will have little leeway to loosen the budget purse strings as it needs to retain the confidence of debt markets.

Grybauskaite delayed picking a prime minister as prosecutors had said they were investigating cases of alleged vote buying mostly involving Labour Party members. The party is also still on trial on charges of tax fraud between 2004 and 2006.

The party has denied being involved in any fraud in the most recent election. Lithuania's top court blocked three elected Labour Party members from taking up parliament places, but gave those places to other Labour Party members instead.

(Reporting by Andrius Sytas; Writing by Patrick Lannin; Editing by Jon Hemming)