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Europe watches as Greeks choose reform path or election defiance

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Greek voters go to the polls on Sunday in an election that will determine whether the country that triggered the debt crisis in 2010 holds to the path of economic reform or challenges its creditors and sets a precedent for all Europe.

[ATHENS] Greek voters go to the polls on Sunday in an election that will determine whether the country that triggered the debt crisis in 2010 holds to the path of economic reform or challenges its creditors and sets a precedent for all Europe.

The election contest pitches Prime Minister Antonis Samaras's New Democracy against opposition leader Alexis Tsipras's Coalition of the Radical Left, or Syriza. Mr Tsipras has pledged to win a writedown of Greek debt and to abandon budget constraints that were imposed in return for aid, goals which Mr Samaras says risk Greece's expulsion from the euro area.

Governments from Berlin to Madrid by way of the European Union's headquarters in Brussels are watching to see which argument prevails. With Syriza extending its lead in the final days of the campaign, polls suggest Mr Tsipras's message of change is resonating more with voters wearied by the Greek economy's contraction by a quarter and record unemployment.

"The question now is not if Syriza manages to win the elections but whether it will be able to secure an outright majority in the Parliament," analysts at Axia Ventures Group Ltd led by Constantinos Zouzoulas wrote in a note to clients Jan 23.

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While a high proportion of the electorate remains undecided, "the majority of these voters could end up supporting the perceived winner, therefore giving Syriza a wider victory than polls suggest," they said.

Bonds and stocks rallied in Athens on Friday, the last trading day before the vote, as the European Central Bank's new bond-buying programme offset investor concerns at the election outcome.

The Athens Stock Exchange rose 6.1 per cent, erasing this year's losses that had reached 4.2 per cent through Jan 22 on concern that the vote will endanger Greece's 240 billion-euro (S$362 billion) bailout. The yield on Greece's 10-year bond dropped 56 basis points to 8.41 per cent.

European policy makers including German Finance Minister Wolfgang Schaeuble and his Dutch counterpart, Jeroen Dijsselbloem, who chairs meetings of finance heads from the 19 countries that share the euro, warned Greece in the past two days against diverting from its agreed bailout program. Spanish Prime Minister Mariano Rajoy, who faces elections at the end of 2015, visited Athens this month to show solidarity with Samaras.

Polls open at 7 am Athens time and close at 7 pm. An exit poll will be released after 7 pm, with a first official projection based on partially counted ballots due at about 9.30 pm. A total of 9.8 million citizens are eligible to cast ballots, more than a third of them concentrated in the Attica metropolitan region, which includes the capital, Athens.

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