UPDATE 1-Greenland's ruling party to seek coalition after narrow election win

Sat Nov 29, 2014 5:31am EST
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* Main opposition party not far behind in vote

* Government must deal with shrinking economy, investors

* Country has some of world's largest mineral deposits (Adds analyst comment, background on mining)

By Sabina Zawadzki

COPENHAGEN, Nov 29 (Reuters) - Greenland's ruling Siumut Party narrowly won a snap election, results showed on Saturday, but its new leader Kim Kielsen will need to build a coalition to form a government to deal with a shrinking economy and reassure foreign investors.

The fall of premier Aleqa Hammond last month in an expenses scandal has muted a nationalist rhetoric that promised independence from Denmark based on wealth from some of the largest mineral deposits on earth.

With nascent mining projects languishing due to persistently low commodity prices and regulatory uncertainty, analysts expected any victor in the polls to focus on reviving a subsidised economy heading for its third year of recession.

Siumut, which has formed every single government in Greenland but one since 1979, won 34.3 percent of the vote. Opposition party Inuit Ataqatigiit, led by Sara Olsvig, won 33.2 percent, Greenland's official election website showed.

Although both parties won the same amount of seats in parliament - 11 each out of a total of 31 - Kielsen is expected to lead coalition negotiations as his party received more votes.   Continued...