Reuters International

Iran's President Hassan Rouhani speaks during a news conference in Islamabad, Pakistan, in this March 26, 2016 file photo. REUTERS/Faisal Mahmood/Files

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By Sam Wilkin

DUBAI (Reuters) - Politicians allied to President Hassan Rouhani came out strongest in a second round of parliamentary elections in Iran, early results showed on Saturday, but his moderate faction appeared unlikely to clinch an overall majority.

If confirmed, the results suggest Iran's next parliament will be more supportive of Rouhani's drive for economic reforms, but conservatives will remain a powerful force and could limit the prospects for social change.

Iranians voted on Friday for 68 seats where no candidate had won decisively in the first round. Rouhani's allies made significant gains in that vote, held in February, ending conservative dominance of the 290-seat assembly.

Rouhani, who came to power in 2013 on a pledge to end Iran's global isolation, has seen his support increase since reaching a nuclear deal with world powers last year, which resulted in the lifting of international sanctions in January.

The ISNA news agency said 34 "reformists" had won seats, referring to Rouhani's allies, along with 22 independent candidates and just seven conservatives. Counting was still going on for five seats. All the results must be approved the Guardian Council, a vetting body.

An unofficial Reuters tally of first-round results showed moderates won about 90 seats, conservatives 112, and independents 29. The figures are approximate because Iran does not have rigid party affiliations and some candidates were backed by both camps.

Therefore, if Saturday's results are borne out, neither the moderates nor the conservatives will have the 146 seats needed for a majority in the next parliament, which will begin sitting on May 27.

The balance of power will be determined by independents, setting the scene for combative politics in which Rouhani's government is likely to enjoy more support than in the past, but will by no means have a free hand.

Meanwhile, hardline factions will continue to assert authority through a number of unelected bodies in Iran's political system, including the judiciary, the Guardian Council, and various branches of the security forces.

"This is a parliament that could perhaps work with Rouhani a little more effectively and be less hostile than the previous one," said Sanam Vakil, associate fellow at Britain's Chatham House think-tank.

"I don't think however they're going to be as supportive should the president try to push through any social and cultural reform, or any liberalisation that challenges hardliners on social and cultural issues," she added.

"It's going to be issue by issue."

Analysts say the government is likely to have more leeway to push through economic reforms, and perhaps finalise a much-anticipated -- and much-delayed -- model oil contract that would allow international oil companies to invest in Iran.

Nevertheless, significant obstacles to foreign investment will remain. Many foreign businesses, especially major banks, are staying away for fear of being caught in those U.S. sanctions that remain in place after the nuclear deal.

(Editing by Robin Pomeroy)

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