Markets hope for outright winner in today’s election

With civil unrest growing in Greece - the country's banks are closed today as a mark of respect, following the deaths of three bankers yesterday when protestors firebombed an Athens branch of the Marfin Bank - there are signs that investors are moving from euro-denominated funds into sterling. The increased capital flows into the UK suggest the financial markets are betting on a Conservative victory in today's general election.

For the past four days investment specialists have watched as investors switched into UK gilts as the eurozone crisis deepened and a decisive Conservative victory began looking more probable, according to eve-of-election polls.

"There are signs that the Conservatives are pulling away in the polls and there are also some haven flows to the UK because of the debt crisis in the eurozone," explains John Wraith at BofA Merrill Lynch Global Research.

At the same time, US officials have begun urging their European and IMF counterparts to contain the damage from the Greek debacle lest the eurozone's economic problems hamper the nascent US economic recovery.

But analysts also a sound a note of caution about placing too much confidence in a Cameron premiership without a strong mandate to cut Britain's $163 billion deficit.

Still, British government bonds, or gilts, are still considered a good investment in view of Europe's sovereign debt problems and the relative weakening of sterling over the last two years.

British voters will not have to wait long for market reaction to polling results and projections.

Three hours after the polls close at 10pm, the London International Financial Futures and Options Exchange (Liffe) will open for business. Traders say business in government bonds, interest rate derivatives and stock futures is likely to be brisk even if no clear result comes in until later in the day.

There's no doubt as to the one thing the markets really want from this election: an outright winner. ·