KIEV - Ukrainian Prime Minister Yulia Tymoshenko launched action on Tuesday to call rival Viktor Yanukovich's election as president into question.

A local newspaper quoted Tymoshenko as saying she will never recognize Yanukovich's victory in Sunday's election and her supporters in parliament announced organized action to try to prove cynical fraud by the rival camp.

But there was some unease among Tymoshenko supporters over the move, which flew in the face of international monitors. They hailed the election as an impressive display of democracy and urged her to accept defeat and shake Yanukovich's hand.

Russia and the United States on Tuesday added their weight to international recognition of the election. Kremlin chief Dmitry Medvedev sent congratulations to Yanukovich and the U.S. Embassy in Kiev, in a statement, endorsed the vote as a step in the consolidation of Ukraine's democracy.

Some Tymoshenko loyalists privately expressed doubts they could prove a case of fraud against the Yanukovich camp.

A legal challenge to Yanukovich's narrow victory -- by just three percentage points -- could deny the ex-Soviet state of 46 million a quick return to stability and rattle financial markets.

Yields on Ukrainian sovereign bonds jumped early on Tuesday, indicating a negative sentiment toward Ukraine. The cost of insuring against state default also jumped as a resumption of International Monetary Fund lending seemed likely to be delayed.

I will never recognize the legitimacy of Yanukovich's victory with such elections, the Ukrainska Pravda quoted the charismatic Tymoshenko as telling a party meeting on Monday.

Tymoshenko had instructed her lawyers to prepare for a court challenge of the results, the daily's website reported.

Her parliamentary faction alleged there had been widespread fraud by Yanukovich's Regions Party camp and it would take legal action to defend the right to fair elections.

Voting day displayed a cynical violation of Ukrainian law by the teams of Yanukovich, pressure on the electors and a broad arsenal of falsification by the Regions Party, Tymoshenko bloc deputy Serhiy Sobolev told parliament.

Consequently, the Tymoshenko bloc announces that we will defend in the courts your right, our citizens, to honest and transparent elections, he said.

DISILLUSIONMENT

The Tymoshenko side appeared set to try to prove thousands of instances of election cheating by the Yanukovich camp and then take a case to a higher court to win a recount or even possibly a third round vote.

The official result signaled a remarkable comeback for Yanukovich, who tapped widespread disillusionment with the Orange Revolution democracy movement that delivered years of infighting instead of prosperity and stability.

His Regions Party is an ally of Russian Prime Minister Vladimir Putin's United Russia and he is expected to tilt Ukraine more toward Russia, ending a deep chill in relations under the pro-Western Viktor Yushchenko.

Yanukovich's camp denied there was any legal basis for challenging the result and ruled out any third round as in 2004, when Tymoshenko successfully led the Orange Revolution against Yanukovich's election in a rigged poll.

There will be no third round. There will be courts -- please go to court -- but there is no legal basis (for action), Yanukovich's campaign manager Borys Kolesnikov told Reuters.

The Orange Revolution, in which tens of thousands of people demonstrated on the streets of Kiev, brought current President Yushchenko to power. Now an enemy of Tymoshenko, he crashed to a humiliating defeat in a first round vote on January 17.

The fiery Tymoshenko remained uncharacteristically silent on Monday. Announcement of a re-scheduled news conference was removed from her website and it was possible she would stay out of the public eye again on Tuesday, weighing her options.

The action announced by her parliamentary faction could delay official publication of the final election results and hold up any inauguration of a new president. This normally takes place within 30 days of publication of results.

If Tymoshenko conceded defeat, Yanukovich could normally have expected to be sworn in as president in mid-March.

TYMOSHENKO DEFIANCE

Tymoshenko's defiance is typical of a woman who fought a bitter campaign against the 59-year-old ex-mechanic whom she branded a puppet of the oligarchs.

A brilliant public performer, she nearly caught Yanukovich up after trailing him by 10 percentage points in the first round. She appears to have failed because her other nemesis, Yushchenko, encouraged his supporters to vote for neither candidate.

Some of her supporters privately said that, unlike 2004, attempts to prove fraud against the Yanukovich camp might fail and they might only be delaying the inevitable.

One should not overdramatize the situation if we become an opposition -- this will give us a chance to grow popular support for Tymoshenko in local elections on May 30 from today's almost 12 million people, Tymoshenko bloc deputy Serhiy Mishchenko told journalists.

Tymoshenko also risks misjudging the country's mood. She has backed off from an earlier threat to call people out onto the streets. But an election-weary people are equally likely to have little appetite for yet another vote.

The country of 46 million people has been battered by economic crisis and badly needs to restart talks with the IMF on a $16.4 billion bail-out package derailed by broken promises of fiscal restraint.

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