Conservative chief quits after Austrian far-right lurch

The head of Austria's conservatives became the first casualty of resurgent far-right parties Monday, with a new leader instructed to tackle tense negotiations over a new coalition government.

Defeated Wilhelm Molterer quit after his party's vote-share slumped by almost nine percent in elections on Sunday, with Josef Proll named the OeVP's new chief executive ahead of a special party conference to confirm him in the post.

But even before then, Proll -- the nephew of party overlord Erwin Proll, governor of Lower Austria state -- admitted he must start tricky talks on forming a new administration with a clean slate.

"All options are open," Proll told a press conference following his nomination, after Austria's electorate had given both main parties their damning verdict on 18 months of sclerotic power-sharing.

Molterer, 53, deputy chancellor and finance minister in the outgoing coalition with the centre-left Social Democrats, handed in his resignation early in the afternoon.

The success of the anti-immigrant Freedom Party and the Alliance for Austria's Future in Sunday's election also created international concern with Israel saying it was following events with "anxiety."

The Social Democrats and the conservatives had each posted their lowest scores ever, in what the Standard newspaper called a "debacle" for the mainstream parties.

Kurier newspaper said they had "deprived themselves of power" by calling the snap election.

The Social Democrats held on to first place with 29.7 percent of the vote, but the result was a 5.6-point drop from 2006, while the OeVP was the biggest loser with a 8.7-point drop to 25.6.

The Green party slipped slightly to 9.8 percent in an election with a turnout of more than 70 percent.

But the election was a triumph for Freedom Party leader Heinz-Christian Strache and his Alliance counterpart Jorg Haider, both of whom are known for their populist rhetoric and anti-immigration stance, having vowed to defend the rights of "true Austrians."

They have warned against the "Islamification" of society, posing as the defenders of low-income families, democratic freedoms and Austrian neutrality.

The Freedom Party finished third with 18 percent, a seven-point jump from the 2006 election, while the Alliance nearly tripled its score with 11 percent of the vote.

The swing to the right was a clear signal of voter anger with the constant political in-fighting that marked the "grand" coalition, observers said.

Israeli foreign ministry spokesman Yigal Palmor said his country was worried about the result. "We are following with concern and anxiety the increase in factions supporting xenophobia, denial (of the Holocaust) and friendship with neo-Nazis," he said.

"The result of elections in Austria is surprising and worthy of concern to some extent, particularly in those cases that represent a rejection of European values," neighbouring Slovenia's foreign ministry also said in a statement.

Preliminary results showed the Social Democrats would have 58 seats, the conservatives 50, the Freedom Party 35, the Alliance 21 and the Greens 19 seats.

The exact distribution of the 183 parliamentary seats will only be officially announced on October 6. But the combined score of the far-right parties would put them in second place ahead of the conservatives.

A repetition of the left-right coalition seems the most likely solution, but both sides must ensure that there is no return to the political paralysis under Social Democrat Chancellor Alfred Gusenbauer, analysts said.

New Social Democrat leader Werner Faymann categorically ruled out a coalition with either far-right party.

His aim was to form a "stable" government, preferably with the conservative OeVP.

Strache ruled out joining forces with Haider's rival far-right Alliance, preferring instead a coalition with the Social Democrats. He called on Faymann to abandon his "obsession of ostracising" the Freedom Party.

Haider, governor of Carinthia province, expressed satisfaction at his party's surprise showing, saying he too was ready to enter into negotiations to form a government.

Molterer, who had called early elections three months ago, described his party's performance as a "painful and dramatic defeat."