[ANKARA] President Recep Tayyip Erdogan, reeling from shock election results, on Tuesday accepted the resignation of the cabinet but asked the prime minister and his team to stay on until a new government is formed.
The ruling Justice and Development Party's (AKP) failure in Sunday's polls to keep its parliamentary majority for the first time since it came to power in 2002 has left the country facing either a coalition government or snap elections.
Erdogan hosted Prime Minister Ahmet Davutoglu for an hour of closed-door talks inside the vast new presidential palace in Ankara.
"Mr President accepted today the resignation of the cabinet that was presented by Mr Prime Minister Ahmet Davutoglu," Erdogan's office said in a brief statement.
"Mr President, who thanked the cabinet for its services so far, asked the cabinet to remain in charge until a new government is formed," it added.
A government source told AFP that the expected move was purely procedural and Mr Erdogan would host Mr Davutoglu again at a later date to discuss starting coalition talks with other parties.
'NO COALITION WITH AKP'
There are however no straightforward coalition options, making snap elections a real possibility.
Mr Erdogan can call snap elections within 45 days if efforts to form a coalition are unsuccessful.
The AKP won 41 per cent of the vote, followed by the Republican People's Party (CHP) on 25 per cent, the Nationalist Movement Party (MHP) on 16.5 per cent and the pro-Kurdish People's Democratic Party (HDP) in fourth place with 13 per cent.
The AKP will have 258 seats in the 550-seat parliament, the CHP 132, and the MHP and HDP 80 apiece.
The result was a huge blow for the AKP which has been largely unchallenged in its political dominance of Turkey over the last 13 years.
The MHP, which shares the AKP's conservative and religious outlook would be the most natural partner, but is opposed to many aspects of the peace process with Kurdish rebels.
The CHP has bitterly denounced Mr Erdogan as a dictator but its leader Kemal Kilicdaroglu has left open the door to a coalition, saying it would be "disrespectful" to voters to leave the country without a government.
"As perplexing as it may seem, I would bet on the grand coalition for Turkey," said Sinan Ulgen, visiting scholar at Carnegie Europe, in a report.
The HDP, whose charismatic leader Selahattin Demirtas was the star of the campaign, has clearly ruled out taking part in any coalition.
"We are clear on this situation. We will not have a coalition with the AKP," said Mr Demirtas, adding that the AKP and CHP should try and form a coalition as the two biggest parties.
The result was an immense breakthrough for the HDP, which managed to easily surmount the 10 per cent threshold needed to win seats and resoundingly defeat the AKP in the Kurdish-dominated southeast.
ERDOGAN STAYS SILENT
The elections were also a bruising blow for Mr Erdogan, the co-founder of the AKP who served as premier from 2003-2014 and as president since August last year.
Mr Erdogan wanted the AKP to win a super majority to push through a new constitution that would give him reinforced powers as president. But instead Turkey has a hung parliament.
To the amusement of pro-opposition bloggers, Mr Erdogan - usually ubiquitous on television and making several appearances a day - has almost vanished from sight since the election and made no spoken comment.
As president, Mr Erdogan should have in theory remained neutral in the campaign but instead waded in on the side of the AKP, blasting opponents at every opportunity.
Turkish media reports have indicated many AKP officials privately admit their campaign badly misfired, with many voters put off by Mr Erdogan and Mr Davutoglu's incendiary but divisive rhetoric.
The Hurriyet daily reported that if Mr Davutoglu fails to form a government the AKP could call an extraordinary congress in August and find a new party leader and premier, possibly Mr Erdogan's predecessor as president Abdullah Gul.
With post-election tensions still high in Turkey's main Kurdish city of Diyarbakir, three people were killed including the leader of an Islamist charity in clashes between rival Kurdish groups in the city, the country's interior ministry said.
Markets have also been rattled by the political uncertainty and on Monday shown heavy losses. But they were calmer on Tuesday with the BIST 100 stock index up 0.44 per cent and the Turkish lira flat against the dollar.