Secularist Iyad Allawi edged ahead of Shi'ite Prime Minister Nuri al-Maliki on Saturday in a neck-and-neck election race that has laid bare the ethnic and sectarian divisions threatening Iraq's fragile stability.

The new results from Iraq's electoral commission, with about 93 percent of an early vote count complete, gave a lead of some 8,000 votes to Allawi, a Shi'ite former prime minister with wide support among minority Sunnis who fear consolidation of the dominance of Shi'ite religious parties in Iraq since 2003.

The lead in the popular vote has changed hands several times and the eventual winner may be able to claim a symbolic victory, but no matter the final result both Maliki and Allawi's will need to engage in long and potentially divisive talks to try to form a coalition capable of forming a government.

As early results trickle in after the March 7 polls, the divided vote is a reminder of Iraq's precarious position on the seventh anniversary of the U.S.-led invasion that ousted Saddam Hussein and plunged Iraq into a bloody civil conflict.

Tens of thousands of Iraqi civilians have died since 2003, along with more than 4,000 foreign soldiers.

Iraq may have held one of the most competitive elections in the region's history, but the course of its democracy is far from certain. It is far safer than it was at the peak of sectarian killing, but a tenacious insurgency keeps Iraq under siege just as U.S. troops halve their force by this summer.

A close election may actually exacerbate those threats by making it harder to form a government coalition and accommodate the conflicting visions -- and personal political ambitions -- of groups as dissimilar as

Maliki's mainly Shi'ite State of Law coalition and Allawi's cross-sectarian Iraqiya list.

Maliki, who has won over many Iraqis with his nationalist rhetoric and steps to crush sectarian violence in Iraq, leads in seven provinces in central and southern Iraq, six of them mainly Shi'ite.

The prime minister now has a narrow 6-percent lead over Allawi in Baghdad, the diverse capital city, but he has virtually no support in largely Sunni provinces where many are sceptical of his Shi'ite Islamist roots and condemn his support of a ban of hundreds of candidates, including prominent Sunnis.

Allawi, who has tried to model himself as a non-sectarian outsider, swept western and northern areas home to large numbers of Sunni Arabs. The physician and fluent English speaker holds a narrow lead over a Kurdish bloc in Kirkuk, the disputed city that is Iraq's northern oil hub.

JUMBLE OF POSSIBLE ALLIANCES

Both Maliki and Allawi supporters are predicting they will get more than 90 seats in Iraq's 325-member parliament.

Full early results will be released in the next few days, and final results may take weeks.

Each camp has suggested that an alliance between the two men is unlikely, making it even more important where other contenders, the Iraqi National Alliance (INA), a Shi'ite bloc closely allied to Iran, and an alliance of two leading Kurdish parties, will throw their weight.

Even before full results are out, fissures are appearing in electoral blocs such as the INA, suggesting the calculus of coalition-building will be even more complex than expected.

Sami al-Askari, a politician close to Maliki, predicted Allawi's alliance would soon splinter. "I don't think this coalition will last long," he said.

Both State of Law and Iraqiya have complained of vote irregularities, and such an outcry could intensify if one bloc feels it was edged out of an outright win.

"Even if fraud was limited, we still feel cheated," said Jamal al-Bateekh, an Iraqiya candidate.

One interesting outcome of this month's vote was the miserable showing some of Iraq's most important leaders, reflecting perhaps Iraqis' exasperation with poor services, rampant corruption, and indiscriminate violence.

Compared to the 543,747 votes Maliki himself got, and 354,097 for Allawi, Interior Minister Jawad Bolani got just 2,992 votes. Defence Minister Abdel Qader Jassim did even worse, with a personal tally of only 687 votes.

Iraq's electoral commission has yet to announce results for voting abroad, which is expected to add support for Allawi, and the results of special voting that includes soldiers, police, prison inmates and the infirm.

(Additional reporting by Muhanad Mohammed; Writing by Missy Ryan; Editing by Jon Hemming)