By Igor Ilic and Ivana Sekularac
ZAGREB (Reuters) - Croatia's conservative Croatian Democratic Union (HDZ) had a clear lead in Sunday's snap parliamentary elections, preliminary results showed, suggesting the party was on course to head a more stable government after a turbulent period for the country.
The HDZ stood at 62 seats in the 151-member parliament, according to preliminary results after 15 percent of votes had been counted in the second election in less than a year, with their Social Democratic (SDP) rival a full 10 seats behind.
But party officials were cautious, warning that the initial results, skewed towards rural districts that are the HDZ's traditional strongholds, may yet change.
"It is still a small number of votes counted and we should not be in euphoria," Zeljko Reiner, the HDZ speaker of the parliament, told public television.
The center-right Most ("Bridge") party which wants to end Croatia's "corrupt" 20-year-old two-party duopoly, was on 13 seats. The likely kingmaker has said any partner would have to promise to implement its reformist ideas.
The previous HDZ-Most government collapsed after just five months amid rows over public administration reforms and government appointments.
Under its new leader, European parliamentarian Andrej Plenkovic, the HDZ, which led Croatia through its first turbulent years of independence and war after the breakup of Yugoslavia 25 years ago, looks to have regained ground lost to the SDP after the previous government's acrimonious fall.
Votes for three seats representing Croats abroad, who traditionally vote for the HDZ, have yet to be counted.
Near-definitive results are due at midnight local time (6.00 p.m. ET).
In a sign of an aversion to a politics that has come to be dominated by populous gestures over recent months, Croats voted in smaller numbers than last time, and lent support to populist parties, like the leftist Zivi Zid ("Human Shield") party, which went from one seat to seven.
"It would be good if this election yielded political stability," said Goran Uzelac from Zagreb just before he cast his ballot. "Unfortunately, I don't think the biggest parties really want major reforms."
EU URGING PAINFUL MEASURES
The new government will face a huge task in revitalising one of the European Union's weakest economies, which is dominated by state enterprises and where red tape deters private investment.
The EU wants its youngest member to tame high public debt, cut the budget deficit and improve the business climate to spur economic growth.
Over the past months, politics have been dominated by populist rhetoric and gestures that have brought relations with neighboring Serbia to their lowest point since the end of the 1990s Balkan wars.
Three years after joining the EU, the country's record on securing European funds is poor, pointing to public administration shortcomings that contribute to macroeconomic imbalances the European Commission sees as excessive.
Parties offered few details during the campaign on how to deliver promised higher standards of living for the 4.3 million people of Croatia, where unemployment stands at 13 percent.
Growth of 2.5 percent is far short of the 4 percent needed to make a dent on living standards, analysts say. Interest payments on public debt eat up 3.5 percent of economic output.
(Writing by Thomas Escritt; Editing by Ralph Boulton and Peter Cooney)