Serbia coalition deal soon 

Serbia appeared to move closer to setting up a government of nationalists and socialists following an inconclusive general election, but coalition negotiations were still going on, officials said.
   
The country has been balanced on a political see-saw between hard-liners and pro-European liberals since Sunday's ballot, which gave neither side a clear majority.
   
The coalition that emerges will decide if Serbia will pursue EU membership or shelve its bid until the EU revokes its recognition of the independence of Kosovo, whose large Albanian majority declared statehood three months ago with EU backing.
   
"We have agreed today on the principles for the formation of a joint government and discussions will continue on a coalition agreement," said Ivica Dacic, leader of the Socialist Party, once headed by the late autocrat, Slobodan Milosevic.
   
Dacic made the statement after talks with the nationalist Radical Party and the DSS-NS bloc of outgoing nationalist Prime Minister Vojislav Kostunica.
   
Serb President Boris Tadic said earlier that a nationalist-socialist pact would be "a short trip on the Titanic", and said he felt bound to oppose it because it would halt Serbia's progress.
   
Tadic said it would be far better for Serbia if the pro-European Union bloc led by his own Democratic Party entered a coalition with Dacic's Socialists. 
   
Talks in the Hague
   
Sunday's election put the pro-Western alliance led by the Democratic Party in first place, but without a majority.

The nationalist Radicals and Kostunica's DSS-NS Kostunica came second and third and quickly joined forces.
   
Radical leader Tomislav Nikolic told the Tanjug state news agency that he expected a deal with the Socialists to "create Serbia's future government".
   
Local reports said he had flown to The Hague to consult with the party's founder, Vojislav Seselj, who is on trial for war crimes in the 1990s break-up of Yugoslavia.
   
Earlier, reports said that nationalists and Socialists had clinched a deal on who would be mayor of Belgrade -- seen as a sure sign of a coalition pact. But there was no announcement at a press conference by the officials involved.
   
The Radicals' secretary general Aleksandar Vucic, a baby-faced firebrand known for his long emotional speeches in parliament, was hotly tipped to emerge as mayor of the capital, but told reporters talks on that were still going on.
   
Tadic's pro-Western bloc wants to push ahead for closer EU ties regardless of Kosovo, so it can woo foreign investment and boost the economy. It argues that only a strong Serbia can defend its interests in Kosovo.
   
Tadic's alliance has signalled it could water down economic reforms to accommodate the Socialists' promises of handouts and focus on social justice.
   
The nationalist bloc advocates freezing Serbia's bid for EU membership until the EU revokes recognition of Kosovo, and instead taking a non-aligned path.

They say they will pursue reforms, but at slower pace, to limit the fallout on the poor.