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Poll rumours fuel Greek stock rally

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Syriza party Alexis Tsipras at an election rally in Omonia square, Athens (AP)

Syriza party Alexis Tsipras at an election rally in Omonia square, Athens (AP)

Syriza party Alexis Tsipras at an election rally in Omonia square, Athens (AP)

Greek stocks have rocketed, reflecting investor hopes that forthcoming elections will yield a government that can avoid a messy confrontation with Athens' bailout creditors and keep the country in the eurozone.

Investors appeared to be reacting to market rumours of new public opinion polls, which cannot be openly released because Greek law forbids their publication in the last two weeks of campaigning.

Athens' main stock index closed a massive 10.1% higher, with banking shares up a collective 23.6%.

Public resentment over austerity measures, which Greece had to adopt as a condition of receiving its rescue loans, has fuelled a surge in popularity for political parties that want to renege on the country's bailout terms.

The election on Sunday is seen as a close race between the biggest such party, the radical left Syriza, and the conservative New Democracy party, which wants to largely adhere to bailout pledges, with amendments in favour of low earners.

Eurobank EFG analyst Nikos Koskoletos said: "There's an investor sentiment build-up, ahead of the elections, that there might be a pro-European government formed, which the market has discounted. Nevertheless, we remain in highly volatile territory."

Greece's creditors - its European partners and the International Monetary Fund - have warned the cash lifeline will dry up if a new government unilaterally abandons previous pledges for further cutbacks and reforms. Without the money, Greece would go bankrupt and be forced out of the 17-country eurozone.

Sergios Melahrinos, an analyst at Solidus Securities, said the stock rally seemed fragile. He said: "This is not a solidly-founded reaction, it is based on rumours and expectations rather than facts. And these can very easily be disproved tomorrow, or on Monday after the elections."

Before market rumours began this week, the latest official polls showed that either New Democracy or Syriza could win on Sunday, although without enough seats in parliament to govern alone.

Syriza leader Alexis Tsipras has insisted that he could scrap Greece's bailout commitments while keeping the country in the eurozone. Mr Tsipras, 37, accused critics of "terrorising" voters by arguing that an anti-austerity ballot will leave the country worse off than it already is.

PA