WRAPUP 3-Britain’s Cameron, Clegg hold post-vote talks

* Cameron and Clegg meet for 70 minutes

* Conservatives and Lib Dem teams to meet on Sunday

* Deal not expected before markets reopen on Monday

* Labour MP is first to call on PM Brown to quit

(Recasts, adds quotes)

By Cecilia Valente

LONDON, May 8 (BestGrowthStock) – The leaders of Britain’s
Conservatives and Liberal Democrats met for over an hour of
talks on Saturday aimed at resolving the stalemate from this
week’s election.

David Cameron’s Conservatives won the most seats in
Thursday’s parliamentary election but fell short of a majority
and are seeking the support of Nick Clegg’s centre-left Liberal
Democrats to end 13 years of Labour rule.

The parties are under pressure to reach some kind of
agreement before the new parliament reconvenes and financial
markets become impatient for signs of decisive action to tackle
Britain’s record budget deficit, running at more than 11 percent
of national output.

Cameron and Clegg met for about 70 minutes at a government
building in London, the Lib Dems said. The Conservatives
confirmed the meeting.

“Their meeting was amicable and constructive and their teams
will meet tomorrow as planned,” a Lib Dem spokesperson said.

Those talks are scheduled for 11 a.m. (1000 GMT).

It is unlikely a deal could be reached by Monday, a
Conservative spokesman said earlier, noting that the party’s new
members of parliament, who will be briefed on the negotiations,
would not meet until Monday evening.

A tight election race produced the first inconclusive result
since 1974, with voters pushing Prime Minister Gordon Brown’s
Labour into second place but failing to give Cameron and his
centre-right party the outright majority they sought.

COMPROMISE ‘INEVITABLE’

Cameron wrote to party supporters before news of his meeting
with Clegg was disclosed, saying he believed there were areas in
which the Conservatives could give ground, such as reducing
taxes for the poor.

“Inevitably, these negotiations will involve compromise,” he
wrote.

“I hope we can sort things out as quickly as possible, for
the good of the country. But we won’t rush into any agreement

The greatest stumbling block to a deal may well be electoral
reform, a long cherished ambition of the Lib Dems who would win
far more seats if Britain switched from its winner-takes-all
system to proportional representation. The Conservatives are
firmly opposed to such a change.

Clegg, who has to win his party’s support before any deal
can go ahead, was locked in discussions with party officials
throughout most of Saturday, which his chief of staff said had
been “positive and productive”.

Financial markets, already rattled by a debt crisis in
Greece, want a new government to be formed quickly so it can set
about reducing the budget deficit swiftly and decisively.

The pound, British government bonds and shares all fell on
Friday when it became clear the Conservatives would not have a
parliamentary majority. But sterling and bonds recouped early
losses on the prospect of a deal with the Lib Dems.

Brown remains prime minister pending a government deal, and
has said he will talk to the Lib Dems about an alliance if their
negotiations with the Conservatives run aground.

A Labour MP, John Mann, called for Brown to step aside,
saying he had cost the party votes at the election and would rob
such an alliance of credibility.

Senior Lib Dem MP David Laws told reporters the party was
determined to play its part in delivering a “stable and good
government”.

“We are keen to do this as quickly as possible but I think
artificial timescales don’t help in making the right decisions,”
he said.

Several hundred protesters chanted outside the Lib Dems’
headquarters, urging them to push for reform of an electoral
system that favours the two largest parties.

“Reforming politics is one of the reasons I went into
politics,” Clegg told the crowd.

DEAL OR NO DEAL?

Cameron left open the format a deal might take when he
offered on Friday to work with the Lib Dems.

This could be a coalition, a rarity in Britain, but is more
likely to involve a pact in which the Lib Dems agree to support
a Conservative-led minority government in implementing an agreed
legislative programme, in return for concessions.

Senior members of both parties met on Friday night.

Another key hurdle is agreement on the pace of lowering the
budget deficit. The Conservatives have pledged to start cutting
it immediately but the Lib Dems say this could harm Britain’s
recovery from a deep recession in 2008-2009.

Britain’s role in the European Union, immigration and
defence are also likely to cause disagreement.

If the Lib Dem/Conservative talks fail, a deal between
Clegg’s party and Labour is possible, but more complicated as
the two parties combined would still not have enough MPs to
command a majority in the 650-seat House of Commons.

Investment Advice
(Additional reporting by Avril Ormsby; Editing by Mark
Trevelyan)

WRAPUP 3-Britain’s Cameron, Clegg hold post-vote talks