* Social Democrats' leader expects difficult coalition talks
* Anti-graft ANO party takes second place, Communists third
* President Zeman will have say in forming government
(Adds voter quote, more results)
By Jana Mlcochova and Robert Muller
PRAGUE, Oct 26 Czech Social Democrats won most
votes in a parliamentary election, partial results showed on
Saturday, but their leader predicted tough talks on forming a
new coalition government after new protest parties performed
The centre-left, pro-European Union Social Democrats led by
ex-finance minister Bohuslav Sobotka won about 22 percent of the
vote, based on the results of two thirds of Czech polling
stations, well below the 30 percent they had been targeting.
A newly formed anti-graft protest movement ANO (Yes) led by
a business tycoon took second spot with about 19 percent, ahead
of the Communists on 16 percent, the partial results showed.
Four other parties - including the two centre-right parties
whose scandal-tainted coalition collapsed in June - also seemed
set to cross the 5 percent threshold to enter parliament.
"If the lower house of parliament is fragmented, we will
face tough negotiations on forming government," Sobotka told
"The Social Democrats are prepared to take on this tough
negotiation and we will try to form a reasonable, stable
cabinet," he said, adding he was ready to talk to all parties
except the centre-right parties who led the last government.
But ANO's billionaire leader Andrej Babis said he did not
want his party joining any new coalition and at present could
not envisage supporting a Social Democrat cabinet.
A Social Democrat government would be expected to slap new
taxes on banks, utilities and high earners to pay for social
programmes and help keep the budget deficit below the EU's
prescribed level of 3 percent of national output.
The Social Democrats, out of power since 2006, have
previously said they want to form a minority government backed
in parliament by the Communists, heirs to the totalitarian party
that lost power in the 1989 "Velvet Revolution".
It would be the first time the far-left party has had any
share in power in the post-communist era.
Financial markets have mostly ignored the election thanks to
the Czech Republic's economic stability, underpinned by low
public debt load and the lowest borrowing costs in emerging
Europe, but they may be rattled by an uncertain outcome and the
risk of drawn-out coalition talks.
The snap election was called after centre-right prime
minister Petr Necas resigned in June in a scandal over alleged
illegal surveillance and bribery.
His Civic Democrats won only about 7 percent and its former
coalition partner, the conservative TOP09, about 11 percent, the
partial results showed.
Anger over sleaze in the central European country of 10.5
million people gave a big boost to ANO and other protest parties
in the final weeks of the election campaign, raising the
prospect of prolonged haggling over a new coalition government.
ANO struck a chord among many voters who had grown weary of
the old parties and seemed willing to overlook Babis's pre-1989
membership of the Communist Party and links to the then-secret
"The current parties have messed it up. They all lie just to
protect each other," said voter Vilem Zajicek, 50, making clear
he was backing one of the new groupings.
Sobotka's hopes of becoming prime minister will hinge not
only on the smaller parties entering parliament.
President Milos Zeman, himself a former Social Democrat
prime minister, has made clear he expects to have a say in the
Zeman's position will be all the stronger if the margin of
the Social Democrats' victory proves narrow. But he may be
weakened by the failure of a leftist grouping of his allies to
make it into parliament, as indicated by the partial results.
Zeman has long disliked Sobotka and may try to negotiate a
coalition headed by another Social Democrat, analysts say.
(Writing by Jan Lopatka; editing by Gareth Jones)