JERUSALEM (Reuters) – Israel headed for political gridlock on Wednesday after its election produced rival winners.

Centrist Tzipi Livni's Kadima party won the most votes but had little chance of building enough support for a coalition. Right-winger Benjamin Netanyahu can get the support, but analysts said the likely coalition would prove dysfunctional.
“I won,” read the headline of the country's biggest newspaper, Yedioth Ahronoth, over photos of both leaders.
But to some commentators, the rival claims showed Israel had lost. “One thing is clear to all Israeli voters,” said the paper's Eitan Haber. “The political system is shattered.”
President Shimon Peres must now decide whether to call on Livni or Netanyahu, who then has 42 days to form a government.
Israeli media said it seemed he would have no choice but to tap Netanyahu if the majority rightist parties all back him.
But it would be the first time in Israel's 60-year history that the winner of an election would be passed over.
The results, not yet official, gave Netanyahu 27 seats in the 120-seat Knesset, while Livni's Kadima won 28.
She said she would be prime minister and invited Netanyahu to join a “unity government.” But Netanyahu said he would lead the “nationalist camp” in parliament, and control 64 seats.
“With God's help I will lead the next government,”
Netanyahu, 59, told supporters of his Likud party.
“Tzipi Livni has only the slightest chance, or none at all, of forming a government under her leadership,” said Abraham Diskin, a political scientist at Jerusalem's Hebrew University.
Hard right in pivotal position
Avigdor Lieberman's far-right, anti-Arab Yisrael Beiteinu party, now third largest, emerged as a potential kingmaker.
“We want a nationalist government. We want a rightist government,” he said. A deal was needed as fast as possible because the state “has been paralyzed for half a year.”
“People may not be aware, but we are still without a budget ... in conditions of global financial crisis,” Lieberman said.
Israel's shekel weakened 0.6 percent against the dollar on Wednesday to near a 16-month low at 4.0610 per dollar, versus 4.0370 before the election.
Netanyahu had been cruising ahead in opinion polls until Olmert's center-left coalition, including Livni, launched a military offensive against Gaza people.
Livni, 50, led the main peace talks last year with Abbas's Palestinian Authority, and would try to revive them.
But Netanyahu is cooler on the key trade-offs for a peace deal -- returning occupied land and curbing Jewish settlement.
Lieberman and religious parties in a coalition would be likely to set virtually impossible conditions for a peace deal.
The Palestinian Authority, which governs the occupied West Bank, said that whoever ends up in charge Israel is obliged to continue talks and to meet international obligations.
The outcome was also unwelcome news for U.S. President Barack Obama.
“The Obama administration is going to inherit the worst of both worlds,” said former U.S. mediator Aaron David Miller.