* Half of Baghdad ballots recounted so far
* Recount should be finished by Friday
* Kurds agree to form one bloc
(Adds Kurds forming one bloc, as expected, paragraphs 8-9, 11)
By Aseel Kami
BAGHDAD, May 9 (Reuters) - Iraq’s parliamentary election results have not changed significantly as the result of a recount of 2.5 million ballots that has now reached the halfway point, an elections official said on Sunday.
Prime Minister Nuri al-Maliki’s predominantly Shi’ite coalition demanded the recount of ballots in Baghdad, alleging fraud after finishing second in the March 7 vote, two seats behind a cross-sectarian bloc headed by former Prime Minister Iyad Allawi, a secular Shi’ite.
The inconclusive result raised concerns of renewed sectarian violence in a power vacuum as politicians jockey for position to pull together a parliamentary majority before a U.S. troop reduction this summer, and full withdrawal by the end of 2011.
The recount, which began last Monday, is expected to be finished on Friday, said Faraj al-Haidari, head of the Independent High Electoral Commission. Baghdad holds more than 20 percent of the seats in Iraq’s 325-member parliament.
"It is possible that there might be a change in a couple of votes here and there," Haidari said. "Change is ... acceptable up to 4 percent and so far the vote count allocation has not changed by even 1 percent."
Allawi’s Iraqiya coalition rode strong support from Iraq’s minority Sunnis to gain 91 parliamentary seats compared to 89 for Maliki’s State of Law bloc.
State of Law announced last week a tie-up with the Iran-friendly Iraqi National Alliance, which finished third with 70 seats, to form the largest grouping in parliament.
Minority Kurds, who are expected to be a partner in any government, on Sunday announced a long-expected merger between their main coalition and a sprinkling of smaller parties. The merger would give them around 57 seats in the next parliament.
The alliance "allows Kurds to speak with one voice" on issues like the city of Kirkuk, which Kurds want incorporated into their semi-autonomous northern enclave, said Kurdish regional president Masoud Barzani.
Allawi has warned that an alliance of the two major Shi’ite blocs that excludes Iraqiya could anger Sunnis and spark renewed violence as U.S. troops prepare to end combat operations in August and pull out completely next year.
Some Kurdish leaders have indicated they are more likely to join a Shi’ite-led coalition than the one headed by Allawi.
Both majority Shi’ites and Kurds were brutally repressed by Sunni dictator Saddam Hussein, and Kurds have strained relations with some Arab nationalists in Allawi’s fold.
IHEC said on Sunday it would send the voting results from 17 of Iraq’s 18 provinces, excluding only Baghdad, to the supreme court for a final certification.
Iraq’s presidency council suggested such a move last week as a way of speeding up the approval of the final results.
Diplomats have expressed concern about the time it is taking to certify the election result, let alone form a government. (Additional reporting by Shamal Aqrawi in Arbil; Writing by Jim Loney; Editing by Mark Heinrich)