By Augustine Anthony
ISLAMABAD (Reuters) - Pakistani President PervezMusharraf's opponents won a big election victory on Tuesday asvoters rejected his former ruling party, raising doubts aboutwhether the U.S. ally who has ruled since 1999 can hold on topower.
Nawaz Sharif, the prime minister Musharraf overthrew in acoup and only allowed back from exile three months ago, urgedMusharraf to accept he was no longer wanted.
"He would say when people would want, I will go. Today thepeople have said what they want," Sharif said after his partyran a close second in Monday's polls.
A wave of sympathy helped the Pakistan People's Party ofassassinated former Prime Minister Benazir Bhutto to emerge asthe largest party in the 342 seat National Assembly.
But it does not have a majority and will need to seekcoalition partners.
Bhutto's assassination in a suicide attack on December 27,heightened concern about the stability of nuclear-armed Muslimstate, where al Qaeda leaders have taken refuge.
Musharraf, who emerged as a crucial U.S. ally in a "war onterror" that most Pakistanis think is Washington's, not theirs,has seen his popularity plummet in the last year as he reeledfrom one political crisis to another.
Groups of happy opposition supporters celebrated in thestreets in cities across the country as results rolled outshowing pro-Musharraf politicians losing.
DISTANT THIRD
The pro-Musharraf Pakistan Muslim League trailed a distantthird, and the party's spokesman conceded defeat but kept openthe 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."
While it was not a presidential election, a hostileparliament could try to remove Musharraf.
Sharif said he planned to meet Bhutto's widower, Asif AliZardari, who took over the helm of the PPP, on Thursday.
"I am looking forward to working with all democraticforces," he said. "I invite all to sit together and freePakistan of dictatorship, sit together to say goodbye todictatorship forever."
Some analysts said differences between the PPP and Sharif'sparty made a coalition doubtful.
Counting was continuing with results still awaited in lessthan 20 seats, but no party could win a majority.
As of 5 p.m. (noon British time), unofficial results for252 seats showed Bhutto's Pakistan People's Party (PPP) had won86 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 votesthey 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.
Increasingly isolated, Musharraf allowed Bhutto to returnfrom eight years in self-exile in October, and, pressured bySaudi King Abdullah, he let Sharif come back a month later,though he was barred from standing in the election.
DECISIVE FACTOR
Bhutto's slaying intensified anti-Musharraf sentiment, withfew people accepting the government's assertion that she waskilled by al Qaeda linked militants, and her death resulted inthe vote being postponed from January 8.
Some analysts said reasons for PML's defeat ranged fromMusharraf's unpopularity to resentment over inflation, foodshortages and power cuts.
Sharif's party found favour for its demands that judgesdismissed last November, when Musharraf imposed a brief spellof emergency rule, should be reinstated to decide whether hecould keep the presidency.
Pakistan's main stock market welcomed the peaceful pollsand absence of rigging complaints, and shares rose more than 3percent. But dealers said the prospect of further politicalupheavals made investors nervous.
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. Islamist parties, that won in2002, were soundly trounced as moderate forces re-establishedtheir influence on Pakistan's most militant-prone region.
(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; Writing by Simon Cameron-Moore; Editingby Alex Richardson)
