The Lookout

Greek elections: Pro-bailout party wins, easing global economic fears, though European, U.S. markets remain cautious

Dylan Stableford, Yahoo News
The Lookout

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People vote inside booths during the elections in Thessaloniki, June 17, 2012. (Nikolas Giakoumidis/AP)

Greeks voted in crucial elections on Sunday, with the center-right New Democracy party receiving about 30 percent of the vote, according to the government's projections. The results will likely keep Greece and its ailing economy in the euro zone and at least temporarily ease fears among the world's financial markets of the "economic tsunami" that could have been.

Market reactions were mixed. Asian shares rose more than 1.5 percent and European index futures increased, but the gains were erased after the markets opened. The Euro STOXX 50, for example, opened up 1.6 percent, while Germany's DAX futures rose 1.5 percent and France's CAC-40 climbed 1.3 percent. Financial analysts are waiting to see whether any positive sentiment would remain by the time the U.S. market opened on Monday, and in fact early readings on stock futures weren't showing signs of a rally. The euro, meanwhile, was down slightly at $1.26, having climbed as far as $1.2748, its highest level in a month.

According to Reuters, New Democracy took 29.5 percent of the vote and the socialist PASOK party took 12.3 percent--giving the pro-bailout parties a majority or 161 seats in the 300-seat parliament.

[Also read: White House welcomes Greek vote]

The radical-left Syriza party came in second, with 27.1 percent. According to the AP, Syriza chief Alexis Tsipras conceded the election.

"I am relieved," New Democracy leader Antonis Samaras told Reuters. "I am relieved for Greece and Europe. As soon as possible we will form a government." New Democracy and PASOK are committed to a $300 billion bailout.

"The Greek people voted today to stay on the European course and remain in the euro zone," Samaras said in a victory speech. "There will be no more adventures, Greece's place in Europe will not be put in doubt."

In a statement released late Sunday, Euro zone finance ministers reiterated its "commitment to assist Greece."

[Slideshow: Greek elections]

"It looks like we've avoided the worst case scenario," Darren Williams, a London-based European economist, told the New York Times. "I think that's important because we could have gone to a very bad place very quickly."

The euro gained in value against the dollar on Sunday, the Times noted, "an early sign that the outcome could provide at least a temporary lift to global financial markets."

The elections did, however, expose "a deeply divided society," Reuters said, and "could leave an emboldened Syriza leading new protests against a coalition governing with significantly less than 50 percent of the electorate's support."

The Times also cautioned that previous market rallies in Europe have been short-lived: "A few weeks ago, markets initially responded positively to a bailout plan for Spanish banks, but that optimism quickly gave out when the American stock markets opened on Monday."

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