JERUSALEM: The prospect of a nuclear-armed Iran poses the biggest threat to Israel in the nation's history, Benjamin Netanyahu said yesterday as he urged his political rivals to unite behind him.

The Likud party leader was asked by Israeli President Shimon Peres to form a coalition following right wing gains in this month's election.

Such a coalition might create a stable, middle-of-the-road government immune to the sort of pressure from fringe parties that has hamstrung previous Israeli administrations.

But there was no sign that his rivals would accept, and Netanyahu may have no alternative but an alliance with far-right and ultra-religious parties, which could tie his hands on making peace with the Palestinians, who are likely to see his nomination as confirmation that most Israelis are in no hurry to pursue peace deals with them.

With 27 seats in the 120-seat Knesset, Netanyahu ended up one seat behind the centrist Kadima party of Tzipi Livni, the dominant partner in the outgoing coalition.

Meanwhile, Hamas has denied sending a letter to US President Barack Obama. The denial came after a UN agency said it thought Gaza's Hamas rulers have delivered a letter to visiting US senator John Kerry, who visited Gaza yesterday.

In a separate incident, a man allegedly smuggling gasoline into Gaza burned to death in a tunnel. Police saw flames and smoke coming from what later turned out to be a tunnel entrance. They pulled three people out, one already dead.