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Key party turns down Livni offer Key party turns down Livni offer
(20 minutes later)
The religions Shas party, a key player in coalition talks, has said it will not back Israeli Foreign Minister Tzipi Livni, according to Israeli media. The Shas party, a key player in Israeli coalition talks, has said it will not back Foreign Minister Tzipi Livni.
Ms Livni, head of Kadima, the largest party in the Knesset, said on Thursday the country would face elections if a government was not formed by Sunday. Ms Livni, head of the largest party, Kadima, said on Thursday Israel would face elections if a government was not formed by Sunday.
She has the support of the Labour party but is still short of a majority.She has the support of the Labour party but is still short of a majority.
Correspondents say she may still be able to form a coalition without Shas, but it is likely to considered weak. Correspondents say Shas's decision is a major setback for Ms Livni. She may still be able to form a government, but it will be considered weak.
After intense negotiations, the ultra-orthodox Shas party said the party was unable to reach agreement with Kadima over the status of Jerusalem and social welfare benefits.
"Shas has asked only for two things... real financial help for the (financially) weak in Israeli society and and protection for Jerusalem... which is not merchandise for sale," a party spokesman said, according to Reuters news agency.
Ms Livni is committed to continuing peace negotiatons with the Palestinians, but Shas is opposed to a government willing to discuss the status of Jerusalem.
Ms Livni's deal with Labour gives her a total of 48 seats in the 120-member Knesset.
She could still form a government if she can secure the support of left-wing Meretz and the Pensioners Party.