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BAGHDAD (Reuters) - Shi'ite Nuri al-Maliki was re-nominated as Iraqi prime minister on Thursday as fractious politicians ended an eight-month deadlock that raised fears of renewed sectarian warfare.
A pact on top government posts reached late on Wednesday brought together Shi'ites, Sunnis and Kurds in a power-sharing arrangement similar to the last Iraqi government, and could help prevent a slide back into the sectarian bloodshed that raged after the 2003 U.S.-led invasion.
In a sign of turbulent relations between the partners, lawmakers from the Sunni-backed Iraqiya alliance of former Prime Minister Iyad Allawi walked out of the parliamentary session at which Maliki was chosen for a second term. Many Sunnis said they doubted Maliki could forge national unity.
"Today is the day of victory. The victory of the true Iraqi will," re-elected President Jalal Talabani told parliament.
Celebratory gunfire rang out in the streets of Baghdad.
In its first steps to implement the deal, parliament met for only the second time since an inconclusive March election, electing Talabani, a Kurd, as president and Iraqiya lawmaker Osama al-Nujaifi, a Sunni, as speaker.
Talabani then nominated Maliki to form a new government. Under Iraqi law, he has 30 days.
The new parliament got off to a rocky start which could foreshadow problems for Maliki's second term.
About two-thirds of Iraqiya's 91 lawmakers, including Allawi, walked out before the start of the vote for president, saying they were angry that agreements between alliance leaders were not being honoured.
"It is obvious that they want to monopolise power," prominent Sunni politician Saleh al-Mutlaq of Iraqiya said after the walkout. "Then I congratulate them for this power."
Sunnis, dominant under Saddam Hussein, would have reacted with outrage had Iraqiya been excluded from government. Some may still feel cheated because of Maliki's return.
OPEC member Iraq, trying to rebuild its oil industry after decades of war and economic sanctions and to quell a stubborn Sunni Islamist insurgency, has been without a new government since an election on March 7 failed to produce a clear winner.
"The most important issue now is that we are out of the bottleneck," said Amer al-Fayyadh, the dean of political science at Baghdad University.
"The formation of a government is now in sight."
The distribution of the top posts along ethnic and sectarian lines was a reflection of the divisions that define Iraq after more than seven years of warfare unleashed by the U.S. invasion.
Washington formally ended combat in August but 50,000 U.S. troops remain to advise and assist the nascent army and police before a full withdrawal next year.
Overall violence has fallen sharply since the height of sectarian slaughter in 2006-2007, but killings and bombings still occur daily, followed every few weeks by a major, devastating assault by insurgents in which dozens are killed.
Allawi, who had pushed hard to displace Maliki as prime minister after Iraqiya won two seats more than Maliki's coalition in the vote, said repeatedly that Sunni anger might reinvigorate the insurgency should his alliance be sidelined.
Tension mounted as Maliki and Allawi wrestled over power. Rockets and mortars were fired at Baghdad's fortified Green Zone district of government offices in the past few days and insurgents killed dozens of people in an attack on a Catholic church and on Shi'ite areas of the capital.
Maliki's return is likely to anger Sunni hardliners, who abhor what they see as Iran's influence over Iraq's Shi'ite leaders and his Islamist background, and Sunni Islamist insurgents, who view Shi'ites as apostates.
While the deal created a job for Allawi as head of a council of strategic policies, and gave Iraqiya a controlling position in parliament, some Sunnis may still feel marginalised, as they did after the previous election in 2005.
"I won't participate in any elections in the future because Iraqiya was the winner but the premiership went to Maliki through Iranian interference. This means that sectarianism will not finish," said Ali Mahmoud, a 36-year-old teacher in the mainly Sunni town of Falluja in Iraq's western province of Anbar.
"What is the use of the parliament speaker? He is just an employee that logs the names of attendants and does nothing."
Despite political squabbles and continuing violence that has unsettled some foreign investors, global oil majors are working to crank up production in Iraq's vast oilfields.
Officials hope to raise production capacity to 12 million barrels per day from 2.5 million now, vaulting Iraq into the top echelon of world producers.
(Additional reporting by Aseel Kami and Rania El Gamal; Writing by Serena Chaudhry and Jim Loney; Editing by Michael Christie and Andrew Dobbie)