Island wird sich im Juli als EU-Mitglied bewerben[en] 

Final results of the elections gave the two leftist parties in the caretaker government 34 seats in the 63-seat Parliament.

"I am touched, proud and humble at this moment when we are experiencing this great, historic victory of the social democratic movement," Sigurdardottir, the 66-year-old leader of the Social Democratic Alliance, told cheering supporters, adding that voters had also backed her idea of starting talks to enter the European Union. Iceland is expected to apply for EU membership in July. 

Sigurdardottir said she hoped to hold a referendum on joining the EU within 18 months. "I think it is very important that we apply immediately for EU membership," she said. "It is my opinion that we will be able to join the euro within four years" of EU membership. 

Sigurdardottir said the vote would mark the first time since the Icelandic Republic was founded in 1944 that left-of-centre parties had won a majority. The election showed the depth of anger at the long-ruling Independence Party, which oversaw Iceland's boom years but was blamed for the economic crisis that erupted last year when banks collapsed under a weight of vast debts. 

Icelanders took to the streets in January after their banks buckled under debt that was used to fuel aggressive overseas expansion into financial services. 

The economy went into meltdown and Iceland's currency plummeted, forcing the government to agree a $10 billion IMF-led rescue for the nation of 300,000. 

Iceland still expects the economy to contract by more than 10 percent this year and inflation was 15.2 percent in March. 

Though the pro-EU Social Democrats will lead the coalition, they have to find a compromise with the anti-EU Left-Greens on entry talks with the bloc. 

Left-Green leader Steingrimur Sigfusson, finance minister in the caretaker government, said informal talks with the Social Democratic Alliance on a new government were held on Sunday and that he expected more serious negotiations later. 

Opinion polls show Icelanders remain divided over the issue of EU entry, but Sigurdardottir said that once they have understood the benefits, they would back such a move.