Iraqi Prime Minister Nuri al-Maliki and rival Iyad Allawi were locked in a close election race, running neck-and-neck for seats in parliament with nearly 90 percent of ballots counted on Thursday.
Maliki's State of Law Alliance led secular ex-premier Allawi's Iraqiya list by just 40,000 votes nationwide, according to latest results based on 89 percent of ballots counted.
But Iraqiya was on pace to garner 90 seats in the 325-member Council of Representatives compared with State of Law's 88, according to an AFP calculation that excluded eight seats reserved for minorities.
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Thursday's figures included 70 percent of ballots submitted during special voting, conducted three days before the election, for security personnel, hospital patients and staff, and prisoners.
Votes cast by Iraqis abroad have not yet been tabulated.
The election, the second since Saddam Hussein was ousted in the US-led invasion of 2003, comes less than six months before the United States is set to withdraw all of its combat troops from Iraq.
Leader of biggest bloc permitted 30 days for a government
Overall, State of Law garnered 2,448,452 votes compared to Iraqiya's 2,408,547, a difference of 39,905. The Iraqi National Alliance (INA), a coalition led by Shiite religious groups, was third nationwide with 1,859,606.
The leader of the biggest bloc in parliament is given 30 days to form a government, under Iraq's constitution.
If he fails to do so in the allotted time, the country's president, who is elected by parliament, must choose another nominee to form a government.
Maliki heads Baghdad and several Shiite provinces
State of Law leads in Baghdad, which is the largest province and accounts for more than twice as many seats as any other.
It is also ahead in the southern oil province of Basra, the third biggest, as well as five other mostly Shiite central and southern provinces, but has failed to finish in the top three in all but one of Iraq's Sunni-majority provinces.
Iraqiya, on the other hand, is ahead in four provinces, including the second biggest, Nineveh. It was also in a virtual tie for the lead in a fifth, Kirkuk, where it was ahead of a Kurdish bloc by around 370 votes.
It was placed in the top three in six predominantly Shiite provinces where Maliki was either first or second.
According to AFP calculations, Iraqiya won 12 seats in provinces where Maliki was leading, while the incumbent was on pace to win just two seats in Allawi-led provinces.
National Alliance likely to secure third
The INA is set to come in third with 70 parliamentary seats, according to the calculations, while Kurdistania, comprised of the autonomous Kurdish region's two long-dominant parties, is likely to have 40.
No other group is set to win more than 10 seats.
Both State of Law and Iraqiya have said they have begun talks with rival blocs to form a government, with analysts warning that political groupings could still manoeuvre to form a coalition without one of the two lists.
Iraq's system of proportional representation makes it unlikely for any single group to clinch the 163 seats required to form a government on its own. Protracted coalition building is expected.
Complete election results are expected in the coming days. Final results - after all complaints have been investigated and ruled upon - are likely by the end of the month.
