Reuters International

Members of South Korean ruling Saenuri Party react as they watch a live TV broadcast reporting the results of parliamentary elections at the party headquarters in Seoul April 13, 2016. REUTERS/Jung Yeon-je/Pool

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By Jack Kim

SEOUL (Reuters) - South Korea's ruling conservatives have suffered a surprise defeat in a parliamentary election in a stinging blow to President Park Geun-hye that will raise doubts about her ability to pursue her agenda to boost a sluggish economy.

The loss by Park's Saenuri Party means her government can expect more legislative deadlock, and a prominent newspaper on Thursday said she now led a lame-duck administration.

Park's tough position on rival North Korea, however, is not expected to be affected by her party's setback, especially given prevailing tension triggered by the North's fourth nuclear test in January and a space rocket launch a month later.

The Saenuri Party had been expected to win a majority but ended up with 122 of the 300 National Assembly seats in the single-chamber parliament in Wednesday's vote. The main opposition Minjoo Party won 123 seats and the People's Party got 38, the National Election Commission announced.

"Saenuri Party humbly accepts the judgment of the people," party chief Kim Moo-sung told a meeting at which he announced he was stepping down.

Park, the daughter of a former leader of South Korea, made no comment on Thursday. Her spokesman, Jung Youn-kuk, said the president's office hoped the incoming parliament would try to address issues affecting the people.

South Korea has a strong presidential system with a leader who is constitutionally limited to a single term but has control over domestic and foreign policy.

The election defeat is likely to be a setback for the prospects of her party fielding a winning candidate in the presidential vote scheduled for December next year for Park's successor.

Her legislative agenda including tax breaks and investment incentives for the service sector and relaxing labour laws to boost jobs has been bogged down in a parliament deadlocked by feuding.

She had blamed both sides, not just the opposition, for the inability to pass bills.

'ECONOMIC DEMOCRACY'

Conservative media that backed Park and her Saenuri Party were critical on Thursday, saying she had done more to harm her chances of working with parliament than anyone.

"Now her government has received a vote of no confidence, the lame duck period has started earlier than any other administration in the past," the conservative Chosun Ilbo newspaper said in an editorial.

The interim leader of the victorious liberal Minjoo Party, former Park ally and adviser, Kim Chong-in, said voters had rejected "misguided" economic policies of Park and her party.

"We will change the course of this country's economy to a path of economic democracy and more inclusive growth," Kim told a news conference.

South Korea's economy grew 2.6 percent last year and youth unemployment reached 12.5 percent in February, the highest since the government started keeping records in 1999, compared with single-digit joblessness in other age groups.

Park's detached and impersonal leadership style had already worried allies and critics alike. The election result will raise even more doubts about her ability to work with a more hostile parliament.

"Even before the election, Park was already having a hard time passing labour reform bills and others. Now it will get harder," said political commentator Kim Man-heum who heads the Korea Academy of Politics and Leadership.

Voter turnout was higher than in two previous elections, defying expectations of analysts and politicians who thought discontent over the economy and squabbling, that resulted in a four-year legislative term considered one of the least productive ever, would keep voters away.

Saenuri held half of the 292 seats in the outgoing assembly. Before recent defections, it held a majority with 157 of the 300 seats.

(Additional reporting by Ju-min Park and Hooyeon Kim; Editing by Robert Birsel)

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