Israel's Prime Minister Benjamin Netanyahu, right, and former Foreign Minister Avigdor Lieberman greet their supporters in Tel Aviv, Israel, Wednesday, Jan. 23, 2013 (Photo: AP)
Israeli premier Benjamin Netanyahu Wednesday emerged from hard-fought elections weakened but still best placed to form a new government and likely to reach out to centrist parties strengthened by the vote.
In results that defied expectations, the centrist Yesh Atid became Israel's second strongest party, just a year after it was created by former journalist Yair Lapid, who has overnight become the country's newest political star.
And the strong results for centrist parties left the Knesset's 120 seats equally divided by the country's rightwing and centre-left blocs.
Though the split means the centre-left could seek to prevent Netanyahu from forming a government, his strong showing leaves him well-placed to form a broad-based coalition, analysts said.
But the result will be a blow for Netanyahu, who had sought a bulletproof rightwing majority that would give him freedom to maneouvre on key foreign policy issues including Iran's nuclear programme and peace with the Palestinians.
By 0600 GMT, with 99.5 percent of the votes counted, Israel's electoral committee said the list grouping Netanyahu's rightwing Likud and the secular nationalist Yisrael Beitenu faction had won 31 seats.
The national religious Jewish Home won 11 seats, as did the Sephardic ultra-Orthodox Shas. The Ashkenazi ultra-Orthodox United Torah Judaism faction won seven seats, bringing the bloc's total to 60.
On the centre-left side, Yesh Atid came away with 19 seats, slightly ahead of the centre-left Labour party, which won 15.
The HaTnuah faction of former foreign minister Tzipi Livni carried six seats, as did the leftwing Meretz, while Livni's onetime party Kadima won just two.
Combined, the three Arab Israeli parties that crossed the electoral threshold to make a showing in the parliament, won 12 seats, giving the centre-left 60 seats as well.
The almost-final figures mirrored the exit polls that were released on Tuesday night after polls closed at 2000 GMT and prompted the 15 or so activists at Yesh Atid's small Tel Aviv campaign headquarters to explode into cries of victory.
"We're going to change things; we're going to change things," they sang, using the party slogan and chanting "Yesh Atid" -- Hebrew for "There is a future."
As the Tuesday night exit polls projected his list on top, Netanyahu thanked voters, and said in a victory speech that he needed to form the "broadest possible coalition".
He addressed Lapid, telling him: "We have an opportunity to do great things for Israel. The election campaign is behind us, and we can now focus on action for the benefit of all of Israel."
Surrounded by ecstatic supporters, some of them in tears, Lapid also pledged to seek a broad government.
"I call on political leaders to work with me, together, to form the widest possible government which will include moderate elements from the left and the right to bring about real change," he said.
Netanyahu said his new government's top priority would be to prevent Iran from obtaining nuclear weapons, but he also faces the longstanding issue of peace with the Palestinians, and a Middle East profoundly changed by the Arab uprisings.
Domestic challenges will be no less pressing, with a larger-than-forecast deficit paving the way for an austerity budget that could now be opposed by centrist parties which campaigned on improving life for Israel's middle class.
Final figures put turnout at 66.6 percent, slightly higher than the 65.2 percent in the 2009 elections. Final election results are not expected until later in the week, after overseas and military votes have been counted.
And the process of forming a coalition of at least 61 members of parliament is expected to take around two weeks, with Netanyahu forced to tread delicately in a bid to win over support from the strongest factions of the centre-left bloc.
Analysts said Lapid, a popular former news anchor and the son of a former politician, had succeeded by running a low-profile campaign focused on economic issues and secular values without alienating the country's religious class.
He has called for drafting the ultra-Orthodox into the army, insisting on a "sharing of the burden" and pledged to protect Israel's middle class, tapping into economic discontent that drove record protests against the cost of living in 2011.