Canadian PM Harper declares election victory

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Canada was headed for its third minority government in four years Tuesday after a general election that handed the lead to the incumbent Conservatives headed by Prime Minister Stephen Harper.

Television networks projected the Conservatives to form a minority, as incoming results showed its candidates either elected or leading in 145 electoral districts after a campaign dominated by the global financial crisis.

At least 155 seats are needed to form a majority in the 308-seat House of Commons, the elected lower chamber of the British-style parliament.

The Liberals were poised to form the official opposition again, with a likely 76 seats, based on returns from Elections Canada, the national electoral agency.

Harper, at the helm of a minority government since January 2006, had started the 37-day electoral campaign ahead in the opinion polls, hoping to trounce the Liberals led by Stephane Dion and usher in a new conservative era in Canada.

But no one issue galvanized voters until world financial markets tumbled in the wake of the US subprime mortgage crisis. Many Canadians lost their savings or their retirement nest eggs, and Harper lost his early 10-point lead.

Suddenly, an election that had seemed ordinary was dominated by the question of who was best qualified to lead the nation amid economic uncertainty.

Canada is the first major economy to go to the polls since the start of a global financial meltdown. The United States follows on November 4 with its presidential election.

Rivals accused Harper of glossing over Canadians' fears of US economic carnage splattering over the border, despite his and his finance minister's efforts to reassure them, "not to panic."

They attacked Harper's "stay the course" message and his suggestion in a television interview that plunging stock markets presented good buying opportunities for investors.

Harper shot back, saying Dion's plan for the largest tax shift in recent Canadian history, massively cutting income and corporate taxes to offset a new pollution tax, was too risky in "uncertain economic times."

Amid the politicking, the Toronto Stock Exchange took its worst beating in almost 70 years, and a leading Canadian bank predicted a recession in 2009.

Canada's economy has actually fared better than that of other Group of Seven industrialized nations, and unlike places like the United States, its banks are not in danger of insolvency.

But around 75 percent of Canadian exports go south to its neighbor and biggest trading partner, and when the US economy stumbled in 1975, 1982 and 1991, so did Canada's.

With 10 days left in the campaign, Harper suddenly found himself running neck and neck with Dion.

To assuage Canadians and in a bid turn his campaign around, Harper's government bolstered Canadian banks with a 25 billion dollar purchase of insured mortgage pools.

Then on election day, the stock market gloom turned to bloom with the Toronto Stock Exchange bouncing back after the United States and European governments unlocked more than two trillion dollars in rescue funds for ailing banks the previous day.