Investors cheer centre-left lead in Italy polls

Mon Feb 25, 2013 10:01am EST
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By Lisa Jucca and Stephen Jewkes

MILAN (Reuters) - Italian shares and bonds rallied sharply, lifting European shares and the euro, after the first polls from a crucial election showed the pro-reform centre-left was well ahead of former premier Silvio Berlusconi's conservative bloc.

The centre-left was ahead by 5.5 percentage point in the lower house and by 6 percent in the Senate, according to a telephone poll for Italy's Sky television published as voting ended at 1400 GMT. That helped to lift European shares and forced German Bund futures to extend losses.

The euro was up nearly one percent against the dollar on the day with forex traders closely following political developments in Italy, the euro zone's third-largest economy.

Yet, results looked tied in the key swing region of Lombardy which the centre-left will need to be sure of control of both houses of parliament.

Beppe Grillo's anti-establishment party appeared to be a distant third.

Italy's main FTSE MIB stock market index extended gains and was up 3.9 percent at 1430 GMT, while the bond yield spread between 10-year Italian and German bonds dipped below 255 basis points, its lowest since mid-January.

"From the polls, it looks like (PD leader Pierluigi) Bersani has got it, even in the Senate (upper house), though there's a bit of doubt surrounding the outcome in the swing Lombardy region," said a fund manager at a large Milan investment house.

"The market didn't want Berlusconi back in the driving seat and the polls are showing the centre-right is coming out a loser. It will be Bersani who decides whether he needs (centrist Prime Minister Mario) Monti or not."   Continued...

Democratic party (PD) leader Pierluigi Bersani casts his vote at a polling station in Piacenza, February 24, 2013. REUTERS/Paolo Bona