Israel's voters threw the country into political uncertainty Tuesday, apparently giving Foreign Minister Tzipi Livni's centrist party the largest share of seats in parliament but shifting the majority to a collection of right-wing parties hostile to her goal of a peace accord with the Palestinians.

Near-complete returns left it unclear whether Livni or her closest rival, conservative Benjamin Netanyahu, would become Israel's next prime minister. Television viewers following the vote count early today watched the two candidates issue competing victory proclamations from separate headquarters in Tel Aviv.
"With God's help, I will lead the next government," Netanyahu declared, calling for a broad, multiparty coalition.

Livni countered with an appeal to him: "Do the right thing," she said, and join a "unity government" led by her.

The outcome is crucial for the Obama administration, which has made finding a solution to the decades-old Israeli-Palestinian conflict a top foreign policy goal. It appeared that a single ultranationalist contender, whose party finished third, could determine Israel's next leader by deciding whom to join.

Livni pledged during the campaign to continue the U.S.-brokered peace talks she has helped conduct for more than a year with the aim of creating an independent Palestinian state.

Netanyahu, a former prime minister, has derided the talks as a waste of time and said Israel should focus instead on confronting regional threats -- Hamas militants in the Gaza Strip, the Hezbollah militia in Lebanon and an Iran that is believed to be developing nuclear weapons.

With more than 99% of the vote counted, Livni's Kadima party held a surprise one-seat margin over Netanyahu's opposition Likud party, which for months had been the front-runner in the race for 120 parliament seats. That result could still change by a seat or two when thousands of soldiers' votes are tallied Thursday.

With far more certainty, the returns projected an overall shift to the right, giving Likud and five other right-of-center nationalist parties that held 50 seats in the outgoing parliament enough support to amass 65 seats in the new one.

Such a majority would put Netanyahu in the stronger position to assemble a governing coalition with at least 61 seats.

President Shimon Peres, whose largely ceremonial job was not at stake, is empowered to designate a party leader to try to form a government. That assignment traditionally goes to the head of the party receiving the most votes, but Peres has leeway to judge who has the best chance of assembling a majority.

If Livni's lead holds up, the bargaining among parties could drag on for days before Peres decides.

A celebration erupted at Kadima headquarters minutes after voting ended at 10 p.m. and exit poll results were announced, projecting a two-seat victory. "Tzipi Livni, queen of Israel!" her supporters chanted.

Activists at Likud headquarters fell into a momentary state of shock at the exit poll results, then began spinning them in Netanyahu's favor.

"The strong rise of the nationalist camp and Likud has only one meaning: The people want a change," Netanyahu told supporters there two hours later.

"Our path has won and it is this path that will lead the people."

He said he would start talks today with other political factions aimed at "uniting all the forces of the nation" in a "strong and stable government."

Soon after, Livni stood before flag-waving supporters and flashed a V-for-victory sign. "Today the people chose Kadima. . . . We will form the next government, led by Kadima."

She will be unable to do that, however, without bringing aboard hawkish parties opposed to peace concessions.

Last fall, she was in the same position but failed. Prime Minister Ehud Olmert, tainted by corruption scandals, had decided to resign and turned over Kadima party leadership to Livni. She tried to assemble a new coalition that would have avoided these elections, but she was thwarted by the ultra-Orthodox Shas party, which rejects giving any part of Jerusalem to the Palestinians.
The nearly complete vote count early today gave 28 seats to Kadima and 27 to Likud.

If the numbers hold, Likud would more than double its strength in parliament and Kadima would lose one seat.
The ultranationalist Israel Is Our Home party was in third place with 15 seats, giving its firebrand leader, Avigdor Lieberman, a pivotal role in determining who leads the next government.

Lieberman is considered an ideological ally of Netanyahu, and in a speech to supporters early today he said his "heart's desire" was a "nationalistic" government.

But he indicated an openness to joining a Livni-led government.

"We're not ruling anyone out," he said.

Defense Minister Ehud Barak's left-leaning Labor Party, a partner in the outgoing government, suffered the biggest defeat of a major party. It trailed in fourth place with 13 seats, down from 19.

The strong gains for right-wing parties reflected a national mood of anxiety over threats to the Jewish state and despair over fruitless efforts to make peace with the Palestinians.

Just three years ago, Kadima won elections on a centrist peace platform. Olmert's plan called for Israeli withdrawal of Jewish settlements from most of the West Bank and a unilateral redrawing of boundaries as a prelude to Palestinians' control of their own state.

But the idea of ceding territory was quickly discredited by rocket fire from Hezbollah in southern Lebanon and Hamas in Gaza, areas from which the Israeli military had earlier withdrawn.

Israel managed to stop Hezbollah's barrages, but their 34-day war in mid-2006 shook Israel's self-confidence. And even the more decisive blow to Hamas, in a 22-day assault that ended last month, left the militant group defiantly in control of Gaza, reinforcing Israelis' self-image as a nation besieged by enemies.

Olmert led negotiations for a statehood agreement with the more moderate Palestinian Authority in the West Bank, but the failure of those talks despite a year of strong U.S. backing left most Israelis with a deep-seated mistrust of the Palestinian side.

Netanyahu's campaign tapped into the fearful, skeptical mood, hammering the message that Israel should stop chasing elusive peace deals.

Any territory ceded to the Palestinians, he said during the campaign, would be "grabbed by extremists." He vowed to destroy Hamas and insisted that peace efforts must focus first on building the Palestinian economy, not on creating an independent state. Meanwhile, he said, Israel should allow existing Jewish settlements in the West Bank to expand.

Those views would be likely to put Netanyahu at odds with President Obama. The Israeli rightist had a truculent relationship with President Clinton during his three years as prime minister in the late 1990s, when his decision to build a new Jewish settlement near Jerusalem plunged U.S. peacemaking efforts into crisis.

Livni said during the campaign that voting for Netanyahu's party would harm U.S.- Israeli relations. But the right-wing candidate emphasized his positive meetings with Obama last year and said he was eager to demonstrate that he could work with the new administration.

Netanyahu's longtime lead in preelection polls vanished in the final week of the campaign, and Livni drew even as Lieberman's party gained strength on a populist proposal: taking away citizenship rights from Israeli Arabs deemed disloyal to the Jewish state.

The campaign, the fifth in a decade for a new government, was characterized by voter apathy and indecisiveness.

In stormy weather across much of Israel, 65.2% of Israel's 5.3 million eligible voters cast ballots, higher than the turnout in the 2006 elections but relatively low by previous standards.