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Local density approximation plus on-site Coulomb interaction U electronic structure calculations reveal that layered perovskite oxide Sr2RuO4 exhibits the ferromagnetic (FM) half-metallic ground state, which is nearly degenerate with the antiferromagnetic (AFM) phase with a slightly higher total energy. The nearly degenerate FM/AFM total energies provide a reasonable explanation for the experimentally observed spin-fluctuation. In addition, a dumbbell-shape 4d - t2g recombined dxz - dyz orbital ordering on the Ru sublattice is obtained o