Iceland parliament rejects motion of no confidence in government

By Ragnhildur Sigurdadottir REYKJAVIK (Reuters) - Iceland's parliament rejected an opposition motion of no confidence in the government on Friday after the prime minister resigned and autumn early elections were announced. Prime Minister Sigmundur David Gunnlaugsson stepped down on Tuesday after documents leaked from a Panamanian law firm linked him to an offshore company that held millions of dollars in debt from failed Icelandic banks. The center-right coalition named Fisheries Minister Sigurdur Ingi Johannsson as prime minister and called for early elections to be held in the autumn. Friday's vote was divided into two questions. Thirty-eight members of parliament voted against the motion of no confidence in the new government and 25 for it. In a vote for the dissolution of parliament and new elections to be held as early as possible, 37 MPs voted no and 26 voted yes. One MP from the junior coalition partner the Independence Party voted for new elections. The new prime minister told Reuters the government needed time to finish important tasks before elections, most importantly the ending of capital controls introduced to rescue the economy from the 2008 financial crisis. "We have very important projects ahead," Sigurdur Ingi Johannsson said after the vote. "There is a lot of work in society to build up trust in society again. That will not happen in one day." Katrin Juliusdottir, vice chair of the opposition Social Democrats, said she believed a wave of popular protest would continue and distrust would linger until there was a date for the elections. The current government were not the only people able to do the job, she said. Polls show the anti-establishment Pirate Party would win an election if held today and protests have continued, with demonstrators gathering on Friday to demand immediate elections and the government's resignation. Party leader Birgitta Jonsdottir told Reuters on Thursday her party belonged to the global movement for change that includes U.S. Democratic presidential candidate Bernie Sanders and Greece's leftwing Syriza party. Two-thirds of voters do not trust the new Icelandic government sworn in yesterday, according to an opinion poll. (Writing by Daniel Dickson; editing by Andrew Roche)