ANKARA (Reuters) - The choice of venue seemed to say it all.
Straying from his vast new $500 million palace, Turkish President Tayyip Erdogan hosted a senior opposition lawmaker at his more modest Ankara residence on Wednesday and appeared, so the lawmaker said, to be in a mood for compromise.
The AK Party Erdogan founded more than a decade ago lost its parliamentary majority in weekend polls, ending more than a decade of single-party rule and dealing a blow to ambitions for a powerful U.S.-style presidency. For Turkey, a political uncertainty not seen since the 1990s beckoned.
Any instability in Turkey is a worry for the European Union and NATO, since the country lies on the edge of the turbulent Middle East with Islamic State militants conducting operations just across its border.
Forced to find a coalition partner for the first time in its history or risk an unstable minority government, the conservative, Islamist-rooted AKP's top brass held a third day of meetings on Wednesday to consider their options.
Prime Minister Ahmet Davutoglu said all options would be exhausted before an early election was considered, and made clear that Erdogan, constitutionally barred from party politics, would not be involved.
"If everybody carries out their duties and responsibilities within the constitutional limits, a culture of reconciliation
will emerge," he said in an interview with state broadcaster TRT, in an apparent shot across the president's bows.
Erdogan meanwhile, yet to appear in public since Sunday's election, held a two-hour meeting with Deniz Baykal, parliament's oldest deputy and the head, until 2010, of the secular opposition Republican People's Party (CHP).
As the elder of the house, Baykal will lead parliament's first session following the election and he was officially meeting Erdogan to discuss the reopening. But coalition alternatives came onto the agenda.
"I observed that Mr President has an understanding that a government should be formed as soon as possible and has a positive attitude on the issue," Baykal told reporters in Ankara after the meeting.
"I got the impression that he is open to all coalition solutions."
That would be quite a climb-down for a man who has in the past cast his political rivals as terrorists and traitors. Hopes of a more conciliatory stance from the Turkish strong man reassured nervous financial markets, with the stock market ticking up on Baykal's comments.
Erdogan's office did not comment.
Champion of the conservative, pious masses, Erdogan views Baykal's CHP, the party of modern Turkey's founder Mustafa Kemal Ataturk, as the bastion of secularists whose elitist mentality he blames for much that is wrong with the country.
There is also little love lost with the right-wing Nationalist Movement Party (MHP), ideologically a more likely coalition partner, whose leader Devlet Bahceli has criticized Erdogan's ambitions for an executive presidency and warned him to "remain within his constitutional limits".
But some of those around Erdogan say he has been chastened by the election outcome and forced to accept compromise.
"He is the founding leader of the AKP and our president, but we have entered a new period with different dynamics," a senior AKP official involved in coalition discussions told Reuters.
"I think Erdogan is reflecting on the election results and taking some steps accordingly ... Time will tell how permanent this will be."
The prospect of a coalition has revived memories for some older Turks of the fractious, short-lived governments that battered the economy in the 1990s and triggered a string of army coups in the second half of the 20th century.
"There is no trust. Not between people, and not between the parties," said Halil Canikli, 55, a former plumber in the Ankara suburb of Sincan, a working-class AKP stronghold.
"Working-class families here... will be drastically affected by these results and by the collapsing economy," he said.
An IPSOS poll, released on Wednesday and conducted shortly after the election results were announced, suggested the AKP would have had 4 percent more support if voters had known the outcome in advance, probably enough to have avoided a coalition.
"A coalition will never work, it will be torture for the people," said Yasar Karabulut, 50, a retired civil servant and Erdogan fan, who said a fresh election should be called.
That remains an option. Should Turkey's political parties be unable to agree a working coalition within 45 days, Erdogan has the right to call a snap election, but AKP officials say that is not their preferred option.
"We believe a coalition with CHP or MHP will be formed. If so, there will be discussions about some of the critical ministries," a second senior ruling party official said.
"It is imperative that the foreign ministry remains with us. The economy is very important, but there are four ministries in the economy. We should definitely aim for a share, but nobody can request single-handed rule of the economy," he said.
According to Daily Sabah, a newspaper close to Erdogan loyalists, he has three red lines for any coalition: the continuation of a peace process with Kurdish militants, respect for his role as president, and the continuation of the fight against the "parallel state" - the network of U.S.-based cleric Fethullah Gulen, whom he accuses of plotting against him.
It is the middle one which appears the most contentious.
"If the president is not pulled back within his legal limitations, it is not possible to even discuss a coalition with AKP," said a senior official from the MHP, stressing any more cabinet meetings in Erdogan's 1,000-room palace would be out of the question.
That the president eschewed the columned "White Palace", a grand symbol of the "new Turkey" he wants to build, might, AKP officials said, be an initial sign of change.
"We might see days where Erdogan is less intrusive," said one, speaking on condition of anonymity.
Additional reporting by Orhan Coskun, Ercan Gurses and Jonny Hogg in Ankara, Ayla Jean Yackley in Istanbul; Writing by Nick Tattersall; editing by Ralph Boulton and Giles Elgood