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GLOBAL MARKETS-Far-left victory in Greece bruises European markets

* Syriza victory in Greece stokes concerns over Europe instability

* ECB QE, hopes for compromise with lenders limit market reaction

* European shares fall, periphery borrowing costs rise

* Euro stabilising after hitting 11-year low

By Marius Zaharia

LONDON, Jan 26 (Reuters) - European shares fell and borrowing costs for the euro zone's most indebted states rose on Monday as the leftist Syriza party looked set to take on Greece's international lenders after a crushing victory in early elections.

Syriza leader Alexis Tsipras promised Greeks on Sunday that the five years of austerity imposed under bailout programmes worth 240 billion euros from the European Union and the International Monetary Fund were over.

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The euro stabilised, but held close to an 11-year low against the dollar hit in Asian trade. The Greek election result is a second blow to the single currency after the European Central Bank launched a money-printing programme last week.

But the ECB's quantitative easing scheme, which surprised many investors with its size and scope, helped ease fears of fresh instability in Europe. Expectations that a compromise can be reached between Athens and its lenders, keeping Greece in the euro, also supported investor sentiment.

"The QE announced last week has gone some way to prop up the markets but the implications of a 'Grexit' will continue to linger," said Tom Robertson, senior trader at Accendo Markets.

The FTSEurofirst 300 index of top European shares was down 0.3 percent at 1,475.49 points, mirroring a similar fall in Asian markets.

Yields on lower-rated euro zone bonds bounced off record lows, with Italian 10-year yields up 1 basis point at 1.53 percent and Spanish and Portuguese yields 2 bps higher at 1.39 percent and 2.26 percent, respectively.

Greek markets suffered more. Ten-year yields rose 22 basis points to 8.99 percent, while Greece's main stock index fell 0.5 percent, with shares in banks such as Alpha Bank (Other OTC: ALBWF - news) and Piraeus Bank hit even more.

Renegotiating the deal could lead to a stand-off between Athens and other euro zone leaders and raise fears of "Grexit", although the consequences of such a move for Europe are likely to push policymakers to find an agreement.

"(German Chancellor Angela) Merkel may prefer to see Greece leave the euro zone than allow Mr Tsipras to dictate the entire economic policy of the euro area, although the most likely outcome remains a compromise which maintains the status quo because the alternatives are potentially so negative," said Gary Jenkins, chief credit strategist at LNG Capital.

"The unknowns of withdrawing from the euro zone are such that Mr Tsipras might rather prefer to take his time through negotiation and continue to enjoy the benefit of the QE programme."

Unlike at the height of the debt crisis in 2011-12, European banks also now have limited exposure to Greece, and policymakers have set out safety nets to deal with renewed contagion.

The euro fell as low as $1.1098, before recovering to trade higher on the day at $1.1224.

"The fact that the ECB's QE programme has already been announced is positive for credit spreads and limits the damage on the euro," said Stephen Gallo, European head of FX strategy with Bank of Montreal (Toronto: BMO.TO - news) in London.

Safe-haven assets were in favour with the German 10-year Bund yield, which sets the standard for euro zone borrowing costs, falling below 0.30 percent for the first time.

Elsewhere, oil slid more than 1 percent on Monday, with U.S. crude falling close to a six-year low. March Brent crude fell 58 cents to $48.22 a barrel, wiping out light gains made on Friday after the death of Saudi King Abdullah, but it was off an early low of $47.85.

Copper dropped to as low as $5,345 per tonne, its lowest level in 5-1/2 years. (Additional reporting by Atul Prakash and Patrick Graham; Editing by Catherine Evans)