BAGHDAD, Feb 13 (Reuters) - A Shi’ite Islamist bloc won Iraq’s first election since Saddam Hussein’s overthrow, sealing the political resurgence of the long-oppressed majority but leaving the restive Sunni Arab minority in the cold.

The Electoral Commission said on Sunday the Shi’ite list, known as the United Iraqi Alliance, took around 48 percent of the vote. But that was less than the bloc had predicted and leaves it six or seven seats short of a majority in parliament.

A powerful Kurdish alliance came second with 25 percent, while a grouping led by interim Prime Minister Iyad Allawi, a secular Shi’ite, came third with nearly 14 percent.

Few Sunni Arabs took part in the Jan. 30 voting, which means the minority that has traditionally ruled modern Iraq and held a privileged position under Saddam, a Sunni, will have just a handful of National Assembly seats and little political clout.

That could stoke the insurgency in Iraq which is being fought mainly by Sunni Arab guerrillas who want to drive out U.S.-led troops and overthrow the American-backed government.

The commission said 8.55 million Iraqis, or 58 percent of registered voters, cast ballots in the Jan. 30 poll, Iraq’s first multi-party election for half a century. The number of valid votes was around 8.45 million.

In Washington, President George W. Bush congratulated the Iraqi people "for defying terrorist threats and setting their country on the path of democracy and freedom".

The national vote was for a 275-member National Assembly that must agree on a president and two vice-presidents by a two-thirds majority. Those three officials will then agree on a prime minister and cabinet, and their choices must be approved by a majority in the assembly.

Sunni Arab turnout was low. Only two percent of eligible voters in the Sunni-dominated Anbar province cast ballots, and only 29 percent in the mainly Sunni Salahadin province. Sunnis make up about 20 percent of Iraq’s 27 million people.

The main Sunni Arab group in the assembly will probably be a bloc led by President Ghazi al-Yawar, although it is set to have only around five seats. A secular party led by Sunni elder statesmen Adnan Pachachi looked unlikely to win any seats.

"The image of Iraq that these results suggest is not real.

That is obvious," Pachachi told Reuters.

In another sign of tensions ahead, Kurds in the ethnically mixed city of Kirkuk erupted in celebrations after results showed them well ahead in the provincial vote-an outcome that will anger Arabs and Turkmen, who also lay claim to the city.

HORSE-TRADING

With no bloc gaining dominance on its own, there has already been furious horse-trading to try to strike deals.

The United Iraqi Alliance insists that one of its candidates

probably current Finance Minister Adel Abdul Mahdi or Vice President Ibrahim Jaafari-be appointed prime minister.

The Kurds want their candidate, Jalal Talabani, to be president or prime minister. Under one scenario, the two blocs could do a deal with a Shi’ite candidate getting the prime minister’s job and Talabani the presidency.

But Allawi, who visited Kurdistan on Saturday and met Talabani, may also try to form alliances to improve his chances. If he can make a deal with the Kurds and persuade some of the Shi’ite alliance to break away, he may be able to keep his job.

"Since it has no majority, the Shi’ite bloc now has not only got to hold together as a group, but form an alliance with others," said Rosemary Hollis, head of the Middle East programme at the Royal Institute of International Affairs.

Even if Sunni Arabs are largely shut out of government, they could still potentially veto the new Iraqi constitution due to be written this year, causing political deadlock. One of the main tasks of the National Assembly is to oversee the drafting of a constitution which must be approved by a referendum.

Sunni insurgents who have been attacking U.S. troops, Iraqi security forces and officials have also turned on Shi’ites, raising fears of sectarian civil war.

Iraq has announced it will close its land borders from Thursday to try to prevent a flood of foreign pilgrims arriving for Ashura, one of the holiest events in the Shi’ite calendar, when millions of people converge on shrines in Iraq.

A car bomb exploded near an Iraqi security forces checkpoint on the road between Hilla and Kerbala in a mainly Shi’ite area south of Baghdad on Sunday, killing at least one person.

Suicide bombers attacked pilgrims in Baghdad and Kerbala last year, killing 171 people, and Ashura could be a flashpoint again this year, especially if the poll results fuel tension.

The bodies of two men who worked with Allawi’s party were found in a rebellious district of Baghdad on Sunday, police said. In the northwest of the capital, gunmen assassinated two senior Iraqi army officers and their driver. The al Qaeda network in Iraq claimed responsibility for the attack.

In the town of Baquba northeast of Baghdad, assailants shot dead a Communist party member who was also a local councillor.

In Mosul, a rocket attack on the city hall building killed at least two people, hospital officials said.

Dubai-based Al Arabiyah television said on Monday that kidnappers have abducted the head of an Iraqi Christian party and are demanding the withdrawal of U.S. troops.