By Anna Ringstrom and Marie Mannes
STOCKHOLM, Sept 14 (Reuters) - Sweden's centre-left opposition looked set on Monday to form the next government as preliminary election results projected a narrow three-seat lead over the right-wing ruling parties with most votes counted after Sunday's election.
An opposition victory would halt a slide to the right over the last four years that has transformed Sweden from one of Europe's most welcoming countries for immigrants to one of its toughest asylum regimes.
While a centre-left government may take a softer line, it is unlikely to return to the generous, open-door immigration policies of past decades, analysts say. It would also stick to Sweden's pro-Western and pro-Ukraine stance.
Left-leaning parties backing Social Democrats leader Magdalena Andersson were projected to win 176 seats in the 349-seat parliament while Prime Minister Ulf Kristersson's right-wing bloc was seen winning 173 seats, the election authority said.
"If this result remains valid, Sweden will get a new government," Andersson told supporters on Sunday night.
Party leaders, however, have been cautious about claiming victory or accepting defeat with 353 election districts still to be counted and overseas votes not likely to be tallied until Wednesday.
In 2022, exit polls initially gave a narrow victory to the centre-left which proved premature and Kristersson showed no sign of conceding when he spoke after Sunday's election.
The blocs were separated by around 0.4% of votes on Monday morning.
Andersson has yet to say how she would unite a divided centre-left behind her in a coalition.
"The most likely outcome is a government led by the Social Democrats," said Niklas Bohlin, political scientist at the Mid-Sweden University. "Exactly what that government will look like is far less certain."
FAR-RIGHT LOSES GROUND
The election pitted a fragmented centre-left against a united centre-right bloc that has overhauled Sweden's immigration and criminal justice systems and planned to bring the far-right Sweden Democrats into the coalition - step too far for some voters.
The party, with roots in the neo-Nazi fringe, lost an estimated 11 seats, projections showed, the first time the party has seen its share of the vote decline since entering parliament in 2010.
If a centre-left win is confirmed, forming a government could take some time.
While Social Democrat leader Andersson would be prime minister, it remains unclear which other parties could be in her government. The Centre Party has refused to share power with the Left Party which says it must be a part of any coalition.
"It could very well be a complicated process to form a government," the speaker of the parliament, Andreas Norlen, told Swedish television.
Andersson has promised voters more spending on welfare, a fairer tax system and a focus on social cohesion. But while the Greens and Left parties want the rich to contribute more, the Centre Party is against a billionaires' tax.
"As for migration policy, I do not think we should expect a return to the more generous approach Sweden once had," said Mid-Sweden University's Bohlin.
Andersson's Social Democrats want to maintain Sweden's tough line on immigration, setting up a clash with the Left and Green parties which want to ease rules.
Asylum numbers have dropped to a 40-year low under the current government which has abolished permanent residency for refugees, tightened welfare rules and stepped up expulsions of those without a right to stay.
(Reporting by Simon Johnson, Anna Ringstrom and Marie Mannes in Stockholm, Stine Jacobsen in Copenhagen; Writing by Simon Johnson and Anna Ringstrom; Editing by Toby Chopra and Andrew Cawthorne)
