Dutch PM wins election, tough fiscal stance likely

Dutch Prime Minister Mark Rutte, one of the few European leaders to survive an election during the euro zone crisis, is expected to form a coalition with his close rival, Labour, and stay committed to a policy of fiscal discipline.

The victory of two centrist, pro-European parties in the general election on Wednesday was hailed by analysts and investors as a sign that one of Europe's richest countries remained a close ally of Berlin.

Liberal Party leader Rutte's last government, which fell after two years, repeatedly urged fiscal discipline on the indebted countries of southern Europe, while insisting that the Netherlands also needed to implement painful austerity measures to meet European Union deficit targets.

The pro-business Liberals won 41 seats in the 150-seat chamber, while Diederik Samsom's Labour Party came second with 39 seats, results showed on Thursday.

Coalition talks will start later on Thursday and typically take weeks or even months in the Netherlands.

The chairwoman of the lower house of parliament, Gerdi Verbeet, spoke by telephone to all the party leaders on Thursday morning, and will meet them at 1200 GMT.

Afterwards, she will inform Queen Beatrix about which procedure parliament will follow in forming a new cabinet.

While Labour is seen as the most obvious partner, Rutte may lose his ally, the outspoken Finance Minister Jan Kees de Jager, whose Christian Democrat party - which has dominated the Dutch post-war political landscape - crashed to its worst result ever, coming fifth.

Voters in one of Europe's last countries with a triple-A credit rating roundly rejected two anti-European fringe parties that dominated the early stages of the campaign, reassuring investors who feared the Netherlands might reject Berlin's strategy for dealing with the euro zone debt crisis.

"Moderate parties that are firmly in the pro-euro camp and committed to fiscal discipline emerged as the winners at a crucial time for the euro zone," said Riccardo Barbieri Hermitte, chief European economist at Mizuho International.

Together, Labour and Liberals would command a comfortable majority in the lower chamber of parliament, although they would need a third party to have majority support in the senate, or upper chamber.