Disillusioned Greeks vote in cliffhanger poll

ATHENS, Sep 16 (Reuters) Greeks voted today in an election that could reflect public discontent with the big parties and transform smaller ones into powerbrokers.

Conservative Prime Minister Costas Karamanlis called the early vote, seen crucial for much-needed economic reforms, confident his economic record would secure an easy win.

But a slow response to summer forest fires that killed 65 people and a series of scandals have hurt his chances.

The election pits Karamanlis against socialist leader George Papandreou, both heirs to prominent political dynasties.

But opinion polls suggest neither may win an outright majority with voters defecting to smaller parties -- including the far-right LA O S party, expected to enter parliament for the first time.

Polls opened nationwide at 7 am (0930 hrs ist) with more than 9.8 million registered voters and 490,000 first-time voters.

Exit polls are expected immediately after voting ends at 7 pm ''We respect and trust citizens and take part in this democratic procedure with a smile and confidence,'' Karamanlis told reporters after voting in the northern city of Thessaloniki.

Opinion polls published before a September 1 blackout showed the conservative New Democracy party leading the socialist PASOK by one to two percentage points and neither had enough votes to form a government. More than 10 per cent were undecided.

In villages and small towns across the country, traditionally clear voting preferences were blurred.

''In the old days we knew what everyone voted for in the village,'' said firefighter Spyros Fotis, 49, in the western village of Athamanion. ''This time we know nothing.'' Karamanlis, nephew of the late statesman Constantine Karamanlis, scored a landslide victory in 2004 against Papandreou, son of the late Prime Minister Andreas Papandreou.

SMALL PARTIES UPBEAT He has said he would rather call a new election than form an uneasy coalition. Papandreou has not ruled out cooperating with smaller parties.

If the vote is undecided and attempts for a coalition fail, Greece faces new elections. That could delay reforms, including reforming an ailing pensions system which could go bust in 15 years, economic analysts say.

The leader of a left coalition, seen to be increasing its percentage and easily clearing the three percent threshold to enter parliament again, sounded upbeat.

''I believe citizens from south to north will today give birth to something new; today the landscape changes,'' SYRIZA leader Alekos Alavanos told reporters after voting in Crete.

Karamanlis prides himself on cutting deficits and creating 200,000 jobs since 2004 but unemployment is still above the EU average despite a healthy 4.4 per cent GDP growth rate this year.

PASOK favours pro-market policies with strong social protection, promising tax breaks, increased pensions and spending 5 per cent of GDP on education, up from 3.6 per cent now.

About 20 per cent of Greeks live below the poverty line and per capita GDP is the lowest next to Portugal's in the euro zone. Brussels says more structural reforms are necessary.

REUTERS SW KP1345