Parties eye new Iceland government amid protest

Parties aiming to form a new centre-left government for crisis-hit Iceland said yesterday they were close to a deal.

Reminding politicians of the discontent that helped topple the previous centre-right prime minister, Geir Haarde, the first leader to fall as a direct result of the global crisis, some 2,000 people again demonstrated outside parliament.

Inside parliament, the Social Democrat Alliance and Left-Green Party held talks on forming a government to lead Iceland to elections between April and June.

"I am hopeful that a government will be formed this weekend, but I don't have the exact timing yet," prospective new prime minister, Johanna Sigurdardottir, of the Social Democratic Alliance, told reporters.

The crisis, sparked after Iceland's fast expanding banks collapsed under a weight of debt, forced Iceland to take a $10 billion International Monetary Fund-led rescue package and caused widespread anger.

Haarde of the Independence Party quit last Monday after weeks of protests, which eventually turned violent.

A delay in the plan to wrap up government talks last Friday came after the Progressive Party, whose support the proposed minority coalition needs, said it wanted to have a closer look at the government agreement and propose some of its own ideas.