Australia seems to be headed for a hung parliament

Australia's ruling Labour Party was just ahead in the country's closest vote in decades, but one respected election analyst said it looked unlikely that either of the main parties would be able to form a majority government.

ABC Television's Anthony Green, one of the country's leading election analysts, projected around 70 seats for each of the two major parties.

That would be six short of the number prime minister Julia Gillard would need to keep control of the 150-seat lower house and mean a hung parliament for the first time since World War II.

ABC's Green projected four independents and one Green MP, who could hold the balance of power.

Official data after two-thirds of votes had been counted gave Labour 60 seats against 50 for the conservative Liberal-National coalition led by Tony Abbott.

To form a government, a party needs 76 seats.

The close vote has raised concerns in markets over the possibility of a minority government unpopular with investors.

"I think we are just going to have to wait until we see what the figures look like over the next day or two," said deputy prime minister and treasurer Wayne Swan, refusing to speculate on the prospect of a hung parliament.

Foreign minister Stephen Smith also said the election was extremely close.

"Everything might have to go right for us to end up with 76," he said.

At stake was not only the political future of prime minister Gillard and the opposition's Abbott, both new and untested leaders, but also Labour's plan for a 30% resource tax and a $38 billion broadband network.

Professor Suri Ratnapala, a professor of law at the University of Queensland, said ruling Labour would be given a chance to form a government.

"The presumption is that the incumbent should be given the right to form a government if it can be done," Ratnapala said.

"If the leader of the party trying to form a government comes to an agreement with enough independent members to form a government, there would generally not be a need for a vote of confidence in government," he added.

From surf club polling booths along Australia's coast to dusty outback voting stations, where political banners swayed in the hot breeze, Australians stood in line to vote.

Financial markets were unsettled on Friday by the prospect that no major party would win enough votes to form the government --- a scenario which would see the Australian dollar sold off and possibly result in policy gridlock and investment paralysis.

Investors are also worried about the likelihood that the Greens will win the balance of power in the upper house Senate and stifle policy and force the next government to increase spending.

Greens leader Bob Brown said his party looked like holding nine of the 76 senate seats in the new parliament.

"It is clear the Greens will have the balance of power in the Senate and we will use that responsibly to make whoever is government more accountable," said Brown, adding that his party would also use its first seat in the lower house responsibly.

The poll may be determined in marginal seats in mortgage-belt areas of Sydney and Melbourne, where there are worries over immigration, as well as in the resource-rich states of Queensland and Western Australia, where there is bitterness over the mining tax.