Nawaz Sharif in talks to form Pakistan government

LAHORE (AFP) - Pakistani election winner Nawaz Sharif was in talks Sunday to form a new government, with fixing the shattered economy and tackling Islamist militancy likely to be his two biggest challenges.

US President Barack Obama welcomed the "historic, peaceful and transparent transfer of civilian power", saying Washington was ready to work "as equal partners" with the new government.

Partial, unofficial results from Saturday's election represented a stunning comeback for the wealthy 63-year-old tycoon who was deposed as prime minister in a 1999 military coup and spent years in jail and exile.

Sharif appears to have done well enough to rule out the prospect of a weak coalition, as the party of former cricket star Imran Khan achieved its own breakthrough on an anti-corruption platform that resonated with younger voters.

Khan's party also looked set to take over the provincial government in the restive northwest, where he has vowed to end US drone strikes.

Taleban violence marred the election campaign with attacks killing more than 150 people, including 24 on polling day.

It remains unclear whether Sharif will preside over any substantive policy change in the war on militants.

While he has voiced support for peace talks with the Taleban, he has been less vocal against US drone strikes than Khan, and is considered a pragmatist with whom Washington can work.

"My administration looks forward to continuing our cooperation with the Pakistani government that emerges from this election as equal partners in supporting a more stable, secure, and prosperous future for the people of Pakistan," Obama said in a statement.

India's Prime Minister Manmohan Singh congratulated Sharif and wrote on his official Twitter page that he hoped to chart "a new course for the relationship" between the nuclear-armed neighbours.

Afghan President Hamid Karzai called on Sharif's incoming government to help negotiate an end to the Taleban insurgency that has ravaged his country since 2001. Pakistan suffers from its own home-grown Taleban insurgency.

Pakistan, which has had three coups and four military rulers, is marking the first time that one elected civilian administration will hand power to another after a full term in office.

Pakistan's largest domestic observer mission, The Free and Fair Election Network, said Sunday that the polls were "relatively fair" despite some irregularities and violence at the polling stations.