France prepares to go to the polls as Sarkozy trails behind

Marion Dakers
FRENCH President Nicolas Sarkozy is forecast to lose the country’s presidential election ahead of the polls opening on Sunday.

Sarkozy is neck and neck in the opinion polls with socialist challenger Francois Hollande for the first round of voting, but is lagging behind when it comes to a run-off vote between the top two candidates on 6 May.

Markets are bracing for a Hollande victory, following claims on the election trail that he will unpick the Eurozone austerity pact and take a hard line on the financial sector. His Twitter feed urged Europe to “fight against finance” yesterday.

“If we don't see a reversal of campaign statements after the elections, then we could possibly see a market attack,” said Marie Diron, economist at Oxford Economics.

Fear in the bond markets could push credit default swaps from 140 bps to 220 bps, claims Bank of America Merrill Lynch.

Yesterday, Hollande’s energy adviser told Reuters that the socialist leader would withdraw France’s support for a US-UK plan to release strategic oil stocks.