Israel's Kadima and Labour reach coalition deal

JERUSALEM, Apr 27 (Reuters) Israeli acting Prime Minister Ehud Olmert's Kadima party and the centre-left Labour Party said they will sign a coalition agreement today, a deal that will form the backbone of a new government.

Kadima won the most votes in Israel's March 28 general election but it needs the support of Labour and several other smaller parties for a parliamentary majority.

''The signing ceremony for the coalition agreement ... will take place at 7:30 p.m. (1630 GMT),'' the two parties said in a joint statement. Political sources said last-minute revisions had delayed the signing, originally scheduled for 1230 GMT.

The deal, which could enable Olmert to form a government by early May after weeks of negotiations, was reached in a meeting between the acting prime minister and Labour leader Amir Peretz.

Under the agreement, Labour will receive seven cabinet posts in the new government, including the senior Defence Ministry portfolio, which Peretz will hold. Olmert seeks to form a broad coalition with more than 80 seats in the 120-member parliament.

He will likely need a strong majority in order to pursue his plan to pull out of parts of the occupied West Bank, while strengthening Jewish settlements in other sections of the territory, in the absence of peace talks with the Palestinians.

Yesterday, Kadima signed a deal bringing the seven-seat Pensioners Party into the government.

With the Pensioners Party and Labour on board, Olmert would control 55 seats in the Knesset.

Kadima was also expected to reach an agreement with the ultra-Orthodox Shas party, which won 12 parliamentary seats in the election. The six-seat ultra-Orthodox United Torah Judaism party also appeared likely to join the government.

But political commentators said the Israel Beitenu party of ultranationalist leader Avigdor Lieberman was unlikely to sign up.

REUTERS CH PM1840