By Niklas Pollard, Simon Johnson and Johan Ahlander
STOCKHOLM (Reuters) -Sweden's right bloc inched into the narrowest of leads with around 90% of votes counted after Sunday's general election, with results pointing to a new government after eight years of Social Democrat rule.
Early on Monday, figures showed the Moderates, Sweden Democrats, Christian Democrats and Liberals winning 176 seats in the 349-seat parliament against 173 for the centre-left.
In further evidence of a shift to the right, the anti-immigration Sweden Democrats are set to overtake the Moderates as Sweden's second biggest party and the biggest in the opposition - a historic shift in a country that has long prided itself on tolerance and openness.
Nevertheless, Moderate leader Ulf Kristersson is likely to be the right's candidate for prime minister.
"We don't know what the result will be," Kristersson told supporters. "But I am ready to do all I can to form a new, stable and vigorous government for the whole of Sweden and all its citizens."
With overseas and some postal votes yet to be counted and the margin between the two blocs wafer-thin, results could still change. Social Democrat Prime Minister Magdalena Andersson did not concede defeat on election night, saying results were too close to call.
The election authority said a preliminary result would be available at Wednesday at the earliest.
Kristersson has said he would seek to form a government with the small Christian Democrats and, possibly, the Liberals, and only rely on Sweden Democrat support in parliament. But it may be hard for him to keep at arms length a party that is set to be bigger than his own.
"Right now it looks like there will be a change of power. Our ambition is to sit in the government," Sweden Democrat leader Jimmie Akesson told jubilant supporters at a post-election party.
"Twelve years ago we got into parliament, I think we got 5.7% finally. Right now we have 20.7%."
TOUGH ON CRIME
Campaigning had seen parties battle to be the toughest on gang crime, after a steady rise in shootings that has unnerved voters, while surging inflation and the energy crisis following the invasion of Ukraine have increasingly taken centre-stage.
While law and order issues are home turf for the right, gathering economic clouds as households and companies face sky-high power prices had been seen boosting Prime Minister Andersson, viewed as a safe pair of hands and more popular than her party. [L8N30D1RY]
Andersson was finance minister for many years before becoming Sweden's first female prime minister a year ago.
Kristersson had cast himself as the only candidate who could unite the right and unseat her.
INTO THE MAINSTREAM
When Kristersson took over as leader of the Moderates in 2017, the Sweden Democrats, an anti-immigration party with white supremacists among its founders, were shunned by the right and left. But Kristersson has gradually deepened cross-party ties since a 2018 election loss and the Sweden Democrats are increasingly seen as part of the mainstream right.
The prospect of the Sweden Democrats having a say in government policy or joining the cabinet has divided voters.
"I'm fearing very much a repressive, very right-wing government coming," Malin Ericsson, 53, a travel consultant, said earlier on Sunday at a voting station in central Stockholm.
The strong result for the Sweden Democrats fits a pattern of gains for the anti-immigration right wing across Europe where Italy looks poised to elect a conservative bloc including Giorgia Meloni's Brothers of Italy (FdI) and Matteo Salvini's League later this month.
"I have voted for a change in power," said Jorgen Hellstrom 47, a small business owner, as he voted near parliament. "Taxes need to come down by quite a bit and we need to sort out crime. The last eight years have gone in the wrong direction."
Whichever bloc wins, negotiations to form a government in a polarised and emotionally-charged political landscape are likely to be long and difficult.
Andersson will need to get support from the Centre Party and the Left, who are ideological opposites, and the Green Party as well, if she wants a second term as prime minister.
(Additional reporting by Janis Laizans, Isabella Ronca, Terje Solsvik and Anna Ringstrom, Editing by William Maclean, Elaine Hardcastle, Catherine Evans, Diane Craft and Lincoln Feast)