By Mette Fraende and Jeremy Gaunt
COPENHAGEN (Reuters) - Denmark's prime minister-elect, Helle Thorning-Schmidt, said on Friday she expected to form a new government quickly, bringing together a disparate "Red bloc" that ended 10 years of centre-right rule in a voter backlash over the economic downturn.
Financial markets generally took Denmark's election in their stride, having expected the result which could trigger extra public spending and higher taxes in the Nordic country.
After meeting the leaders of the parliamentary parties at the royal palace on Friday afternoon, Queen Margrethe formally gave Thorning-Schmidt the task of trying to form a government.
Thorning-Schmidt, who will be Denmark's first female leader when formalities are over, faces the tough task of pleasing coalition partners ranging from mainstream centrists to the far left.
"We have a majority and we will use that majority," she said, a day after tapping voter anger about economic decline to take a relatively narrow victory and eject Prime Minister Lars Lokke Rasmussen from power.
She said she hoped to form a three-party government by the opening of parliament on October 4 at the latest. A fourth party, in the bloc but outside the cabinet, would secure a majority.
"We'll be ready when we're ready," Thorning-Schmidt said after emerging from her meeting with the Queen. "The most important thing is to have a solid government programme."
She said she hoped for broad political cooperation across the middle of the spectrum.
Danish newspapers on Friday questioned how long a coalition led by the Social Democrat Thorning-Schmidt could last, noting sharp differences between parties within the Red bloc.
These differences touch on pension reform, taxes, unemployment benefits and immigration rules.
In all, Thorning-Schmidt's Red bloc will have a slim majority of five seats in Denmark's 179-seat parliament.
Commentators did not doubt her ability to establish a coalition government, but foresaw difficulties in making it work.
"With a parliamentary basis consisting of parties in deep mutual dispute over the most important questions in society, the election victory last night could turn out to be a short-lived triumph for Thorning-Schmidt," the daily Berlingske said.
The biggest winners of the night were both in Thorning-Schmidt's camp but have little in common -- the far-left Red-Green Alliance and the centrist Social Liberals.
Denmark's stock market was slightly lower on Friday, bucking the broader European trend, but traders said it was mainly due to specific stocks and not related to the election.
Some analysts warned, however, that markets could become worried if government formation talks drag on.
ECONOMY AHEAD
The economy will be the first challenge. Thorning-Schmidt's platform included increased government spending, raising taxes on the wealthy and an unusual plan to make everyone work 12 minutes more per day -- or an extra hour each week. Her group argues this would help to kick-start economic growth.
Denmark has been spared much of the trauma suffered by other west European countries because it remains outside the euro zone. So it was not involved in bailing out debt-laden countries such as Greece, an issue that has stirred popular anger in neighbouring Germany.
But the crisis has turned Denmark's healthy budget surplus into a deficit forecast to reach 4.6 percent of GDP next year.
Denmark was the latest European country where voters have thrown out incumbent leaders partly because of the economic crisis. Ireland, Britain, Portugal, Finland and The Netherlands have all had changes of government in the past year or so.
Spain's Socialist government also faces possible defeat in a November 20 general election while German Chancellor Angela Merkel has lost a series of state elections since May 2010.
Denmark's next prime minister is part of an extended European political family, married to the son of Neil and Glenys Kinnock. Neil was a European commissioner and Labour Party leader, Glenys a European parliamentary deputy and Europe minister in the last Labour government in Britain.
(Additional reporting by Anna Ringstrom, John Acher and Terje Solsvik; Editing by Mark Heinrich)
