By Robert Birsel
ISLAMABAD (Reuters) - Pakistani President PervezMusharraf's opponents won a big election victory on Tuesdayafter voters rejected his former ruling party, raisingquestions about the future of the U.S. ally who has ruled since1999.
Counting was continuing with results still awaited in lessthan 20 seats, but no party was expected to win a majority inthe 342-seat National Assembly.
The opposition parties of assassinated former PrimeMinister Benazir Bhutto and former Prime Minister Nawaz Sharifappeared to have won enough to command a majority, according tounofficial results. But there is no certainty that they willwork together.
The pro-Musharraf Pakistan Muslim League was trailing adistant third, and the party's spokesman conceded defeat butkept open the possibility of joining a coalition.
"Obviously, the nation has spoken through the ballot. Wecouldn't convince them. They have rejected our policies and wehave accepted their verdict," PML's Tariq Azim Khan toldReuters.
"For the best interest of the country, we're willing tocooperate and work with anybody."
As of 3.30 p.m. (10:30a.m. British time, unofficial resultsfor 252 seats showed Bhutto's Pakistan People's Party (PPP) hadwon 86 and Sharif's Pakistan Muslim League (Nawaz) had 65.
The pro-Musharraf PML trailed with 37. Small parties andindependents shared the others.
A few seats weren't contested, while 70 seats reserved forwomen and religious minorities will be divided upproportionately among parties according to the number of seatsthey've won.
Musharraf has said he would accept the results and workwith whoever won to build democracy in a country that hasalternated between civilian and army rule throughout its60-year history.
DECISIVE FACTOR
Groups of happy opposition supporters celebrated in thestreets in cities across the country as results trickled out.
Some analysts said reasons for PML's defeat ranged fromMusharraf's unpopularity to resentment over inflation, foodshortages and power cuts.
Pakistan's main stock market welcomed the peaceful pollsand absence of rigging complaints, and shares rose more than 3percent. But dealers said the formation of a parliament hostileto Musharraf would make investors nervous.
Monday's vote was postponed from January 8 after Bhutto wasassassinated in a suicide attack on December 27, which raisedconcern about the nuclear-armed country's stability.
The PPP, led by Bhutto's widower, Asif Ali Zardari, hadbeen expected to reap a sympathy vote, while Sharif's party isdoing surprisingly well despite a mixed record as primeminister, when he clashed with the judiciary.
His defiance of old foe Musharraf and support for thejudges he purged had paid off, analysts said.
As president, former army chief Musharraf did not contestthe elections, aimed at completing a transition to civilianrule, but the outcome could seal his fate.
A hostile parliament could try to remove Musharraf, whotook power as a general in a 1999 coup and emerged as a crucialU.S. ally in a "war on terror" that most Pakistanis think isWashington's, not theirs.
COALITION QUESTIONS
Analysts said the implications for a president whosepopularity slumped after he imposed emergency rule and purgedthe judiciary last year were ominous.
"It's the moment of truth for the president," said AbbasNasir, editor of the Dawn newspaper. "There will be thoughtsswirling in his mind, whether he can forge a workingrelationship with two parties whose leadership he kept out ofthe country."
A victory for Sharif, who has repeatedly called forMusharraf's removal, or the inclusion of his party in acoalition with the PPP would be disastrous for the president.
Some analysts said differences between the PPP and Sharif'sparty made a coalition doubtful.
Increasingly isolated, Musharraf allowed Bhutto to returnfrom eight years in self-exile, and reluctantly let Sharif, theprime minister he overthrew come back from exile in lateNovember. Sharif was promptly barred from standing in thepolls.
At least 20 people were killed in election violence,including, Zardari said, 15 PPP activists.
But that was not as bad as feared after a bloody campaign.
Opposition concerns about rampant rigging by Musharraf'ssupporters also proved unfounded.
An election watchdog group put turnout at 35 percent.
A secular ethnic Pashtun nationalist party was winning inNorth West Frontier Province, beating Islamists who won in2002.
(To read more about the Pakistan election, double-click on;and visit the Reuters blog "Pakistan: Now or Never?" athttp://blogs.reuters.com/pakistan/)
(Additional reporting by Zeeshan Haider, Faisal Aziz andSahar Ahmed in Karachi; Editing by Simon Cameron-Moore)
