Italy's stock market has risen sharply after the first exit polls from a crucial general election showed former leader Silvio Berlusconi's conservative bloc trailed the centre-left Democratic Party.
The leading stock market index, the MIB, extended gains and was up nearly 4% at 2.30pm GMT, while the bond yield spread between 10-year Italian and German bonds dipped below 260 basis points, its lowest since the start of February.
Markets were in support of Pier Luigi Bersani, who heads the Democratic Party.
Exit polls showed Mr Bersani's centre-left coalition leading a national vote that is testing Italians' resolve to stay the course of painful economic reform.
Sky Italia said Mr Bersani's coalition has taken 35.5% of the vote for the lower house of parliament, ahead of the centre-right coalition under former premier Mr Berlusconi with 29%.
The poll by Tecne has a margin of error of plus or minus 2.5%.
A political movement founded by comic-turned-political agitator Beppe Grillo is projected to take 19% of the vote, while outgoing Prime Minister Mario Monti's centrist coalition has 9.5%.
ETX Capital's head of trading Joe Rundle said: "Traders have switched on the buy signal, snapping up peripheral stocks ... while the EUROSTOXX 50 (Zurich: ^STOXX50E - news) index is also basking at the prospects of Italy not going down a road of destabilisation with Berlusconi’s anti-reform policy.
"Markets were hopeful that there will be no real change to the status-quo in Italy and demonstrated this by today's positive price-action but this early exit poll has almost cemented it."
A fund manager at a large Milan investment house added: "The market didn't want Berlusconi back in the driving seat and the polls are showing the centre-right is coming out a loser.
"It will be Bersani who decides whether he needs Monti or not."
Polls closed at 2pm GMT, ending two days of voting. The first projections based on partial vote counts are expected at around 7pm GMT.
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