Oppn parties in talks to end deadlock
Britain's opposition Conservatives and Liberal Democrats were set for fresh talks on Sunday on a pact to enter government and break the general election deadlock.
Four-strong teams of Tory and Lib Dem negotiators are due to meet for a second round of discussions, though few expect them to finalise a power-sharing deal before the financial markets open on Monday.
The negotiations come after Conservative leader David Cameron and Liberal Democrat counterpart Nick Clegg held their first face-to-face talks on joining forces to oust Prime Minister Gordon Brown's Labour Party from office after 13 years.
Spokespersons for the two sides described the private 70-minute discussion Saturday as "constructive and amicable".
Brown later called Clegg for what was again described as an "amicable" conversation.
The three leaders stood side by side Saturday at a service marking the 65th anniversary of Victory in Europe Day.
But despite the show of unity, Britain remained in political limbo with Cameron holding the most seats in parliament, Brown still in nominal power and Clegg the so-called kingmaker following Thursday's vote.
The Conservatives won the most seats in the Thursday's vote but ended up 20 short of an overall majority in the 650-seat House of Commons, leaving Britain with its first hung parliament for 36 years.
The Conservatives now have 306 lawmakers, compared to 258 for Labour. The Liberal Democrats dropped back to 57 seats. Northern Irish parties make up the bulk of the rest.
Cameron emailed supporters to say Britain expected the Conservatives and Liberals to "work out how we can deliver strong and stable government to tackle Britain's big and urgent problems."
He drew red lines on ceding powers to the European Union, and a soft approach to immigration and defence.
But he also said there were areas where the Tories could "give ground... in the interests of forging an open and trusting partnership.
"Inevitably, these negotiations will involve compromise. But that's what working together in the national interest means.
"I hope we can sort things out as quickly as possible, for the good of the country. But we won't rush into any agreement."
The parties are not natural bedfellows, with the Lib Dems closer to Labour in many areas.
If a deal cannot be done, Cameron is prepared to try to rule as a minority Conservative government, relying on ad hoc support from smaller parties.
Clegg gained his party's endorsement Saturday to enter talks with Cameron, whose "big, open and comprehensive offer" to the Liberals had opened the door to talks.
Three separate meetings of senior party figures, Lib Dem lawmakers and the party's federal executive each gave their "full and complete" backing to Clegg's approach.
Clegg said the Lib Dems were negotiating in a "constructive spirit" and making the case for their four key priorities: tax reform, education, the economy and the existing political system.
Electoral reform is likely to be the biggest sticking point. The Conservatives are in no mood for changing the voting system.
Meanwhile Brown is still in the prime minister's 10 Downing Street residence, with his government still in place.
Brown is open to discussions with the Lib Dems if they and the Conservatives cannot strike a deal, and has dangled "immediate legislation" on electoral reform before them.
Brown telephoned Clegg for talks late Saturday, the Lib Dems revealed.
"At the request of the prime minister, Nick Clegg took a call from Gordon Brown this evening. The conversation was amicable," a party spokesman said.
Two Labour lawmakers have already broken ranks and urged Brown to resign.
"He must go and I don't think we will have renewal until we get a new leader," former sports minister Kate Hoey told BBC radio.
John Mann said: "Gordon Brown's continuation as the party's leader rules out the credibility of a Lib/Lab pact... he has been seen as a poor prime minister who is out of touch and aloof."
The pound slumped to a 13-month low against the dollar on fears the deadlock would hamper Britain's ability to tackle its giant public debt.