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imageANKARA: Turkish Prime Minister Ahmet Davutoglu on Monday said he had exhausted all options to form a coalition government, leaving the country facing snap elections just months after the June 7 polls.

The ruling Justice and Development Party (AKP) lost its overall majority in the June 7 legislative polls for the first time since it came to power in 2002, in a major setback for its co-founder President Recep Tayyip Erdogan.

AKP leader Davutoglu met Nationalist Movement Party (MHP) chief Devlet Bahceli in Ankara, in what was seen as a last ditch chance to agree a coalition government.

But Davutoglu said afterwards that there could be no agreement with the MHP, which by share of the vote came third in the polls.

"Mr Bahceli told me clearly that he saw no possibility to form a government with the AKP," he told reporters in Ankara.

"I did everything and tried all the possible formulae. But there is no path possible for a coalition," he added.

Bahceli also made clear he did not support propping up any minority AKP government, Davutoglu said.

Davutoglu had on Thursday announced the collapse of several weeks of coalition talks with the second placed Republican People's Party (CHP), saying early elections now looked like the "only option" for Turkey.

It remains unclear when the polls could take place, with some analysts indicating November 22 as a possible date.

New polls will come at a time when Turkey is fighting a cross-border offensive against Islamic State (IS) jihadists in Syria and Kurdistan Workers' Party (PKK) militants in northern Iraq and risk causing further political and economic uncertainty.

The prospect of early elections again unnerved markets, with the Turkish lira losing 1.16 percent in value against the dollar to hit a new record low of 1.865 lira to the dollar.

Some analysts have suggested Erdogan all along wanted to see a re-run of the election so the AKP could regain an overall majority and realise his dream of creating a presidential system in Turkey.

Copyright AFP (Agence France-Presse), 2015

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