By Sergio Goncalves, Catarina Demony, David Latona
LISBON (Reuters) -Portugal's centre-right Democratic Alliance was set to finish first in Sunday's parliamentary election but fall short of an outright majority with 92% of ballots counted, suggesting tough negotiations ahead with the far-right that made huge gains.
The populist, far-right Chega party came third with nearly 19% of the vote, almost tripling its result in the last election in early 2022, when it won 7.2%. It campaigned on an anti-establishment message, vows to sweep away corruption and hostility to what it sees as "excessive" immigration.
Pending the final tally, the Democratic Alliance (AD) garnered 29.8% of votes, slightly ahead of the incumbent Socialist Party (PS) that had earned 28.7%.
The provisional results were in line with exit polls published after polling stations closed at 8 p.m. (2000 GMT). Turnout was almost 65%, up sharply from 51.5% in 2022.
"It's the end of the two-party system," Chega leader Andre Ventura told reporters, referring to the PS and the Social Democratic Party (PSD), which helms the newly created AD. The two have alternated in power since the end of a fascist dictatorship five decades ago.
Sunday's vote clearly shows the Portuguese want a coalition government between the AD and Chega, Ventura added.
However, the AD has so far ruled out any deal with Chega, which could make for an unstable minority government that far-right lawmakers could topple at any point.
At the AD election night party, supporter Paula Madeiro said there was "no doubt that instability will be constant".
Alexandra Ferreira, a 21-year-old law student and member of the Socialist Party, said she was "very sad" with the results because of the far-right's growth. She said it showed that "we have a society with no memory", in reference to the dictatorship that ended in 1974.
AD supporter Joao Cunha, also 21, said the country's situation was bad after eight years of the PS in power, with young people still emigrating in search of better opportunities. He hoped a change in government would bring about reforms in healthcare and higher education.
Sunday's ballot was triggered by Socialist Prime Minister Antonio Costa's resignation amid a graft investigation four months ago.
Issues dominating the campaign in western Europe's poorest country include a crippling housing crisis, low wages, sagging healthcare and corruption, seen by many as endemic to the mainstream parties.
(Reporting by Sergio Goncalves, Catarina Demony and David LatonaEditing by Andrei Khalip, Frances Kerry, Christina Fincher and Giles Elgood)
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