Swedish snap election looms as Liberals urge PM to step aside

By Johan Ahlander and Anna Ringstrom

STOCKHOLM (Reuters) -A snap election looked increasingly likely in Sweden on Thursday as the Liberal Party said it would not help restore a Social Democrat-led government after Prime Minister Stefan Lofven lost a no-confidence vote in parliament.

Lofven was the first Swedish prime minister to lose such a vote, held on Monday after the Left Party withdrew its support for the government over a planned easing of rent controls.

He has a week from Monday's vote to resign or call a new election and is holding talks to try to save his minority coalition, which was created with support from parties including the Liberals.

Liberal leader Nyamko Sabuni said her party now wanted a right-of-centre government and Lofven should step aside.

This would give the parliamentary speaker the chance to sound out whether the assembly would back another administration, possibly headed by the opposition Moderate Party's leader, Ulf Kristersson.

"A vote for the Liberals is a vote for a centre-right government," Sabuni said in a statement on Facebook. "We should be able to find solutions ... if Stefan Lofven does not unnecessarily announce a snap election."

Opinion polls suggest a snap election may not break the deadlock.

Much of that deadlock stems from how the traditional parties view the hardline anti-immigration Sweden Democrats. They have been shut out by all parties but some on the right are now open to cooperation, which has caused tension among former allies.

Lofven on Thursday called on the Liberals to rethink their position and start talks on a new deal that would give his minority coalition the chance to stay in power.

"There is a solution - a proposal for a solution," Lofven told reporters in Brussels. "Let's discuss it, take some time to think it through and let's make sure we avoid political uncertainty."

The Centre Party - which backs Lofven in return for market-friendly reforms - has dropped its insistence that the government introduces rent reform, potentially easing the way for the Left Party to return to Lofven's side.

The Centre Party also offered the Liberals the chance to negotiate a new policy deal, including tax breaks, as a sweetener.

Lofven needs backing from the Left Party and the Liberals to form a viable government.

The Liberals have a strong reason to avoid a snap election as opinion polls show them lacking the 4% support they need to get into parliament.

The Green Party - Lofven's junior coalition partner - is also close to the 4% threshold in some opinion polls and the outcome of a general election is highly uncertain.

(Reporting by Johan Ahlander and Anna Ringstrom; Editing by Simon Johnson, Timothy Heritage and Giles Elgood)