JERUSALEM (Reuters) - Israelis voted on Tuesday in an election that is expected to hand hawkish Prime Minister Benjamin Netanyahu a third term, opening the way for a showdown with Iran and bolstering opponents of Palestinian statehood.
However, Netanyahu's own Likud party, running alongside the ultra-nationalist Yisrael Beitenu group, looks set to have fewer seats than in the previous parliament, with opinion polls showing a surge in support for the far-right Jewish Home party.
Political sources said Netanyahu, concerned by his apparent fall in popularity, might approach center-left parties after the ballot in an effort to broaden his coalition and present a more moderate face to Washington and other concerned allies.
"We want Israel to succeed, we vote Likud-Beitenu ... The bigger it is, the more Israel will succeed," Netanyahu said after voting alongside his wife and two sons.
Some 5.66 million Israelis are eligible to cast a ballot, with polling stations closing at 10 p.m.. Full results are due by Wednesday morning, opening the way for coalition talks that could take several weeks.
By 2 p.m., the Israeli election committee said turnout was 38.3 percent, up from 34 percent at the same time in 2009 and the highest level since 1999. Ahead of the ballot, analysts had speculated that high turnout would benefit center-left parties that have sometimes struggled to motivate their voter base.
The lackluster election campaign failed to focus on any single issue and with a Netanyahu victory predicted by every opinion poll, the two main political blocs seemed to spend more time on internal feuding than confronting each other.
"There is a king sitting on the throne in Israel and I wanted to dethrone him, but it looks like that won't happen," said Yehudit Shimshi, a retired teacher voting in central Israel in balmy winter weather that drew out the electorate.
No Israeli party has ever secured an absolute majority, meaning that Netanyahu, who says that dealing with Iran's nuclear ambitions is his top priority, will have to bring various allies on board to control the 120-seat Knesset.
The former commando has traditionally looked to religious, conservative parties for backing and is widely expected to seek out the surprise star of the campaign, self-made millionaire Naftali Bennett, who heads the Jewish Home party.
Bennett has ruled out any peace pact with the Palestinians and calls for the annexation of much of the occupied West Bank.
His youthful dynamism has struck a chord amongst Israelis, disillusioned after years of failed peace initiatives, and has eroded Netanyahu's support base.
The Likud has also shifted further right in recent months, with hardline candidates who reject the so-called two-state solution dominating the top of the party list.
"TRENDY PARTIES"
Surveys suggest Bennett may take up to 14 seats, many at the expense of Likud-Beitenu, which was projected to win 32 in the last round of opinion polls published on Friday - 10 less than the two parties won in 2009 when they ran separate lists.
Acknowledging the threat, Netanyahu's son Yair urged young Israelis not to abandon the old, established Likud.
"Even if there are more trendy parties, there is one party that has a proven record," he said on Tuesday.
Amongst the new parties standing for the first time in an election were Yesh Atid (There is a Future), a centrist group led by former television host Yair Lapid, seen winning 13 seats.
"All our lives we voted Likud, but today we voted for Lapid because we want a different coalition," said Ahuva Heled, 55, a retired teacher voting with her husband north of Tel Aviv.
Lapid has not ruled out joining a Netanyahu cabinet, but is pushing hard for ultra-Orthodox Jews to do military service - a demand fiercely rejected by some allies of the prime minister.
Israel's main opposition party, Labour, which is seen capturing up to 17 seats, has already ruled out a repeat of 2009, when it initially hooked up with Netanyahu, promising to promote peace negotiations with the Palestinians.
U.S.-brokered talks collapsed just a month after they started in 2010 following a row over settlement building, and have lain in ruins ever since. Netanyahu blamed the Palestinians for the failure and says his door remains open to discussions.
Palestinian President Mahmoud Abbas says he won't return to the table unless there is a halt to settlement construction.
That looks unlikely, with Netanyahu approving some 11,000 settler homes in December alone, causing further strains to his already notoriously difficult relations with U.S. President Barack Obama, who was sworn in for a second term on Monday.
IRAN THREAT
Tuesday's vote is the first in Israel since Arab uprisings swept the region two years ago, reshaping the Middle East.
Netanyahu has said the turbulence - which has brought Islamist governments to power in several countries long ruled by secularist autocrats, including neighboring Egypt - shows the importance of strengthening national security.
If he wins on Tuesday, he will seek to put Iran back to the top of the global agenda. Netanyahu has said he will not let Tehran enrich enough uranium to make a single nuclear bomb - a threshold Israeli experts say could arrive as early as mid-2013.
Iran denies it is planning to build the bomb, and says Israel, widely believed to have the only nuclear arsenal in the Middle East, is the biggest threat to the region.
The issue has barely registered during the election campaign, with a poll in Haaretz newspaper on Friday saying 47 percent of Israelis thought social and economic issues were the most pressing concern, against just 10 percent who cited Iran.
One of the first problems to face the next government, which is unlikely to take power before the middle of next month at the earliest, is the stuttering economy.
Data last week showed the budget deficit rose to 4.2 percent of gross domestic product in 2012, double the original estimate, meaning spending cuts and tax hikes look certain.
(Additional reporting by Ori Lewis, Jeffrey Heller and Tova Cohen; Editing by Alistair Lyon)
