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THE WINNER: NETANYAHU BY LESS THAN 1%

Benjamin Netanyahu, riding a wave of anger over Islamic suicide bombings in Israel, was declared the winner Friday over Prime Minister Shimon Peres.

In a nail-biting finale, Netanyahu became the next Israeli leader by winning 50.4 percent of the votes compared with 49.5 percent for Peres, according to final unofficial results released by the Central Election Commission Friday.The results from Wednesday's election - which took two days to count - underscored how deeply divided Israelis are over peace negotiations with the Palestinians and the Arab world.

Peres, who won a Nobel Peace Prize for his breakthrough autonomy agreements with PLO leader Yasser Arafat, was ready to give up most of the West Bank and Gaza Strip, which Israel captured in the 1967 Mideast war.

However, Netanyahu, head of the opposition Likud Party, has said he would make Israeli security his top concern and give troops a free hand against Palestinian militants who set off four suicide bombs in Israel this spring.

The attacks, which killed 63 people, wiped out the 16-point lead Peres held after the November assassination of his predecessor, Yitzhak Rabin, by a Jewish militant who wanted to stop the peace process.

Fear was a major theme in the Netanyahu campaign, with the opposition leader saying he would make people feel more secure.

Netanyahu had waited for the final results at his home in the upscale Jerusalem district of Rehavia. Ringed by security guards, his wife Sarah by his side, the 46-year-old waved to several dozen supporters who chanted "victory, victory."

"The country is in good hands," he said.

Spokesman Shai Bazak said Netanyahu would not claim victory before Sunday.

Peres, 72, has not appeared in public since Wednesday's election. His defeat will probably mean the end of a political career that spanned five decades, including two stints as prime minister.

Palestinian leaders have expressed concern that a Netanyahu victory would slow or paralyze negotiations over the final status of the West Bank, Gaza Strip and Jerusalem.

"Maybe the next government will hesitate and postpone," said Mustafa Natche, the Palestinian mayor of the West Bank town of Hebron. "Maybe there will be a continuous delay in all the fields. This will be dangerous for the peace process."In results announced Friday, Netanyahu won 1,501,023 votes, compared with 1,471,506 for Peres. Another 148,681 votes for prime minister were declared invalid.

Tamar Edri, the director general of the Central Election Commission, said the count was nearly final but that problems remained with a few ballot boxes. Final official results were to be announced next week, she said.

A total of 3.9 million Israelis were eligible to vote and turnout was 79.7 percent, about average for an Israeli vote.

Throughout the campaign, Netanyahu said he would take a tougher line than a Peres government. He has said he would expand Jewish settlements in the West Bank, block the creation of a Palestinian state and not discuss the future of Jerusalem.

He has also said he would not honor a commitment by Peres to pull troops out of most of the West Bank city of Hebron after the elections.

Ariel Sharon, a senior Likud official, said Friday a Netanyahu government would not necessarily honor all elements of the Israel-PLO peace agreement, known as the Oslo accord.

"Our government cannot accept the Oslo accord exactly as it is," Sharon told Israel radio, adding that the new government would not redeploy troops in Hebron for the time being.

Arafat, who attended noon prayers Friday at a Gaza City mosque, refused to comment on the elections. Sitting cross-legged on the mosque carpet, he appeared pale and downcast. His Cabinet was to meet Friday evening in a special session to discuss the Israeli elections.

Religious Jews and settlers in the West Bank and Gaza, who voted for the 46-year-old Netanyahu in droves, rejoiced.

"We feel like this is salvation," said Aryeh Saraf, a security guard in the West Bank settlement of Beit El.

In heavily secular Tel Aviv, the mood was funereal. Peres supporters gathered at the site of Rabin's slaying, laying red and white wreaths at the foot of the stairs where he was shot seven months ago. "Rabin was killed on Nov. 4 - Peace was killed on May 29," read one sign.

"I think it is going to destroy the peace process. I only hope the damage (Netanyahu) causes is not so big that we can't then solve it," said Cpl. Shiri Evan-Chaim, 19.

Netanyahu will have 45 days to present a coalition government to the 120-member parliament. Bazak said coalition negotiations will begin immediately when results are declared final.