New Zealand election: Labour and National woo Winston Peters' NZ First in hopes of forming coalition

New Zealand election: Labour and National woo Winston Peters' NZ First in hopes of forming coalition

New Zealand election: Labour and National woo Winston Peters' NZ First in hopes of forming coalition

Updated 8 October 2017, 16:00 AEDT

New Zealand's Labour and National parties hold separate talks with kingmaker Winston Peters as both try to form a coalition government.

New Zealand's Labour and National parties have held separate talks with kingmaker Winston Peters as both try to form a coalition government.

The small nationalist New Zealand First party holds the balance of power after an inconclusive election on September 23.

The party's leader Winston Peters had said he would only make a decision on which party to back after the results of the election become official on October 12.

Mr Peters remained tight-lipped after talks with National Prime Minister Bill English, saying the meeting was "fine", and later met Labour Party leader Jacinda Ardern.

"I can say that we've had an excellent, productive meeting," Ms Ardern told reporters after coming out of the two-hour meeting.

Ms Ardern has brought Labour within reach of forming government since becoming party leader in August, with a Labour-Green bloc winning 54 seats, two seats short of the ruling National's 56.

New Zealand First holds the nine seats needed to meet the 61-seat majority in parliament.

A final vote count on Saturday showed National lost some ground to the Labour-Green bloc from a preliminary tally, even though it still held the largest number of seats in parliament.

"It did pay to wait, didn't it?," Mr Peters said, referring to the final vote count.

Mr Peters has held the balance of power several times and has previously served in both National and Labour governments.

Mr English said on Saturday that negotiations would now likely focus on the economy.

Both Labour and New Zealand First have said they want to curb immigration, renegotiate certain trade deals and adjust the role of the central bank — albeit in different ways.

"I think on Monday the market is going to be a little bit subdued because basically nothing has changed," Stuart Ive, private client manager at OM Financial, said.

"You could say that the policies are probably more aligned to a Labour-Green-NZ First partnership but a three-way coalition is a lot harder to manage than a two-way coalition."

Reuters