His Social Democratic Party and its left-wing allies, the Left Party and the Greens, together won a comfortable 53 percent of votes, representing 191 mandates in the 349-seat parliament, while the four-party centre-right opposition was clearly beaten with 43.8 percent of votes and 158 seats, according to the official count which did not yet include some 50,000 postal votes.

Persson claimed the results a "fantastic success", while Bo Lundgren, leader of the main conservative opposition Moderate Party, conceded defeat.

"It is with great disappointment that both I and Moderate voters received the result this evening."

Persson fought the election highlighting the need to reform while keeping Sweden's welfare system intact and rejecting the opposition's tax cut agenda.

Financial markets were expected to react positively to the election outcome.

"What is striking is that after a year of uncertainty, with the September 11 attacks on the US and the economic slump, the Social Democrats have managed to maintain their support. They are perceived as a guarantor of stability and security in uncertain times," political analyst Arne Modig told Nampa-AFP.

The Social Democrats came within a whisker of winning enough votes to govern with the Left Party alone, but failed to miss this goal by just one seat and will now still require the tacit support of the Greens, their other informal partner since 1998.

The Social Democrats obtained 40.0 percent of votes and remained the largest party in the country, while the Left party won 8.4 percent.

Persson predicted the next four years would require "plenty of humility and work".

The Greens won 4.6 percent and 17 seats.

The clear defeat for the opposition bloc came as something of a surprise after polls predicted a much closer race. However, one of its members, the Liberals, more than doubled its score from the 1998 elections, to 13.3 percent, making it the third largest party in the country on a platform of improving integration of immigrants into Swedish society.

Political analysts said they expected the Greens to back the Social Democrats in a new government, even though Persson has consistently refused them any role in his next cabinet.

Voter participation was at a post-war low of 79 percent, according to early results.

Persson's victory bucks the trend of right-wing election victories across Europe in the past year, including France, the Netherlands, Portugal, Norway and Denmark.

Al Burke, sociologist and editor of the Nordic News Network, said the win would allow Persson to pursue Sweden's pro-EU policies and lead the country into the euro-zone, with a referendum likely to be held next year.

Financial markets, which had been jittery at the prospect of a possible election upset, were expected to react quietly stronger to the result and analysts predicted a stronger krona and easier short term rates in the money markets.

"It appears that things will continue the way they have been for the past four years, and the concerns experienced recently by the markets will therefore disappear," said Paer Magnusson, an analyst at Danish bank Danske Bank told the Swedish news agency TT.

Lessening tension in the short-term interest rates combined with a stronger currency will give the Swedish central bank room to cut leading interest rates, which in turn should boost the stock market and consumer confidence, analysts said.

"There is room for rates to come down somewhat in relation to the rest of the world," said Robert Bergqvist, senior analyst at Swedish bank SEB.

Analysts said Persson is Sweden's best chance to win approval for adoption of the euro.

"It would have been much more complicated for a centre-right government" to persuade unions and the anti-euro Left Party to join the single currency, Nordea chief economist Olle Djerf told TT.

jh-po/bm

Nampa-AFP WEB story ENDS (NAMPA 160050)

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