Italians head to polls in crucial vote for euro zone

ROME (Reuters) - Italians vote on Sunday in one of the most closely watched elections in years with markets nervous about whether it will produce a strong government to pull Italy out of recession and help resolve the euro zone debt crisis.

A huge final rally by anti-establishment-comedian-turned-politician Beppe Grillo on Friday before a campaigning ban kicked in has highlighted public anger at traditional parties and added to uncertainty about the election outcome.

Polling booths will open between 02:00 am-04:00 pm EST on Sunday and 01:00 am-09:00 am EST on Monday. Exit polls will come out soon after voting ends and official results are expected by early Tuesday.

The election will be followed closely by financial markets with memories still fresh of the potentially catastrophic debt crisis that brought technocrat Prime Minister Mario Monti to power more than a year ago.

Italy, the euro zone's third-largest economy, is stuck in deep recession, struggling under a public debt burden second only to Greece's in the 17-member currency bloc and with a public weary of more than a year of harsh austerity policies.

Italy's Interior Ministry has urged some 47 million eligible voters to not let bad weather forecasts put them off, and said it was prepared to handle even snowy conditions in some northern regions to ensure everyone had a chance to vote.

Final polls published two weeks ago showed center-left leader Pier Luigi Bersani with a five-point lead, but analysts disagree about whether he will be able to form a stable majority that can push though the economic reforms Italy needs.

Bersani is now thought to be just a few points ahead of center-right rival Silvio Berlusconi, the four-times prime minister who has promised tax refunds and staged a media blitz in an attempt to win back voters in recent weeks.

While the center left is still expected to gain control of the lower house thanks to rules that guarantee a strong majority to whichever party wins the most votes nationally, a much closer battle will be fought in the Senate, which any government also needs to control in order to be able to pass laws.

Seats in the upper house are awarded on a region-by-region basis, meaning that support in key regions can decisively influence the overall result.

Pollsters still believe the most likely outcome is a center-left government headed by Bersani and possibly backed by Monti, who is leading a centrist coalition.

But strong campaigning by Berlusconi and the fiery Grillo, who has drawn tens of thousands to his election rallies, have thrown the election wide open, causing concern that there may be no clear winner.

Whatever government emerges from the vote will have the task of pulling Italy out of its longest recession for 20 years and reviving an economy largely stagnant for two decades.

The main danger for Italy and the euro zone is a weak government incapable of taking firm action, which would rattle investors and could ignite a new debt crisis.

Monti replaced Berlusconi in November 2011 after the euro zone's third-largest economy came close to Greek-style financial meltdown while the center-right government was embroiled in scandals.

The former European Commissioner launched a tough program of spending cuts, tax hikes and pension reforms which won widespread international backing and helped restore Italy's credibility abroad after the scandals of the Berlusconi era.

Italy's borrowing costs have since fallen sharply after the European Central Bank pledged it was prepared to support countries undertaking reforms by buying unlimited quantities of their bonds on the markets.

But economic austerity has fuelled anger among Italians grappling with rising unemployment and shrinking disposable incomes, encouraging many to turn to Grillo, who has tapped into a national mood of disenchantment.

(Reporting by Catherine Hornby; Editing by Jason Webb)

Source: http://news.yahoo.com/italians-head-polls-crucial-vote-euro-zone-000341345--business.html

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