Israel's prime minister-designate Benjamin Netanyahu says talks to include the centrist Kadima party in a coalition have ended without agreement.
The Likud leader said he had faced "categorical rejection" in 90-minute talks with Kadima leader Tzipi Livni.
Minutes earlier, Mrs Livni said the meeting "concluded without agreement on key issues".
Mr Netanyahu has been tasked with forming a government in the wake of elections earlier this month.
In other regional developments, Israel's military attacked alleged smuggling tunnels in Gaza on Thursday, in what it said was retaliation for earlier rocket launches.
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