Left wins power in crisis-hit Iceland

By Patrick Lannin

REYKJAVIK (Reuters) - Iceland's Social Democrats began negotiating over a centre-left government coalition on Sunday with plans to push for European Union membership talks for the crisis-hit nation.

Caretaker Prime Minister Johanna Sigurdardottir, 66, claimed victory in an election on Saturday held three months after protests over an economic meltdown forced a conservative-led government out of office.

Sigurdardottir, who wants to start negotiations quickly on EU membership and then have a referendun, held a first round of talks with caretaker coalition ally the Left-Green party.

The Left-Greens have been opposed to EU entry but Sigurdardottir and the Left-Green leader have said they think they can find a compromise to take the EU question forward.

On Monday she was due to meet the president, who gives the formal authority to form a government.

"The talks today were productive and friendly," she said on the RUV state broadcaster after meeting Left-Green leader Steingrimur Sigfusson.

She earlier told the Morgunbladid daily that she did not expect the coalition talks to founder on the EU issue.

The parties must also find budget cuts and revenue rises, possibly via tax increases, to get state finances back into order and reduce a huge budget gap caused by meltdown.