STOCKHOLM (Reuters) - Sweden moved closer to a snap election on Monday after fruitless attempts to form a government by both the centre-left and centre-right blocs left Prime Minister Stefan Lofven until the end of the day to resign or call a national vote.

       Lofven lost a motion of no-confidence in parliament on June 21 after the Left Party withdrew its support, triggering frenzied talks as both the centre-left and centre-right tried to line up enough support to form a government.

       "The decision that will shake up Swedish politics," daily Dagens Nyheter said in its front page headline on Lofven's dilemma. "Deadlock with just hours to go," tabloid Aftonbladet said.

       Lofven, a former welder has headed a fragile minority coalition with the Greens since 2018, relying on support from two small centre-right parties and the Left Party to remain in power.

       Since then he has been juggling the goals of the business-friendly Centre and Liberals with that of Sweden's former communist party, finally dropping the ball over reform of the highly regulated rental market.

       His mismatched government is a result of the rise of the Sweden Democrats, a party with roots in the far-right fringe, which is now the third biggest in parliament.

       The centre-right split over whether to seek a political accord with them after the 2018 elections, with the Centre and Liberals choosing to support their former rivals instead of giving the Sweden Democrats a chance to influence policy.

       The Liberals have now changed their minds and returned to the centre-right mainstream.

       But even with their support, and that of the Sweden Democrats, the Moderates - the biggest centre-right party - does not have the votes to form a government either.

       Lofven has until midnight tonight to either hand in his resignation to the speaker of parliament or to call a snap election. Most commentators see a vote in September as the most likely outcome.

       Opinion polls show a general election might not alter the make up of parliament.

       (Reporting by Simon Johnson; editing by Niklas Pollard)