Iceland's Progressive Party, the junior partner in the ruling coalition, will step down after a poor performance in the weekend parliamentary election, Prime Minister Geir Haarde of the Independence Party has said.
Mr Haarde and Progressive Party leader Jon Sigurdsson have been locked in discussions since Saturday's election about how to proceed after the government eked out a one-seat majority and support for the Progressives weakened sharply.
'We have decided to stop the talks and we will talk to other parties to form a government,' Mr Haarde said.
He said he had no preferred choice but would certainly talk to the Social Democrats, whose leader Ingibjorg Solrun Gisladottir had hoped going into the vote to lead a government-toppling coalition.
'My guess is that Ingibjorg is interested in working with us,' Haarde said.
