Conservatives' slim lead narrows in tight seats

Conservative Party leader David Cameron pauses during a Reuters newsmaker event in London March 2, 2010.

LONDON (Reuters) - The Conservatives' lead over Labour in 60 crucial constituencies has narrowed to two points, a poll showed on Thursday, adding to the view that the looming election will be inconclusive.

The Conservatives, seeking to end 13 years of Labour rule, have been ahead in national polls for over two years but their once-commanding lead has shrunk as the election nears. It is widely expected to take place on May 6.

The YouGov/Channel 4 News survey found that 39 percent of those polled in so-called "marginal seats" -- where the contest will be tightest -- would vote Conservative, while 37 percent would support Labour.

The Conservatives had a seven-point lead when the poll was last conducted in February 2009.

Channel 4 News said the gap between the two main parties in the 60 marginal seats is the narrowest since the autumn of 2007, months after Gordon Brown took over as prime minister from Tony Blair, who stepped down in mid-term.

The channel's political editor Gary Gibbon said the result pointed to a "hung parliament" in which the Conservatives would have the largest number of seats but would be 11 seats short of a majority. Britain last had a hung parliament in 1974.

Financial markets, which are focussed on Britain's record deficit and want the next government to tackle it aggressively, do not like the prospect of a hung parliament.

They fear wrangling between the parties could delay painful but necessary public spending cuts.

The Conservatives have not said what they would do in the event of a hung parliament in which they were the biggest party.

They would have the option of forming a government alone and seeking support from other parties on an issue-by-issue basis to get legislation through, or of trying to form a coalition -- most realistically with the third party, the Liberal Democrats.

Most opinion polls do not focus on specific constituencies but instead seek to give a snapshot of public opinion nationwide.

The Conservatives consistently had a double-digit lead until late January, when it fell to single digits.

In Britain, percentages won by each party nationally matter less than the number of seats won as it is the party with the largest number of seats in parliament that forms the government.

It would be possible for the Conservatives to win a greater share of the national vote but still win fewer seats than Labour. Four national polls since February 22 have pointed to precisely that outcome.

The Channel 4 News poll looked at only 60 key seats out of the total of 650 constituencies that will be contested.

It said it had selected those 60 constituencies because they were won by Labour at the last election, in 2005, but with a tight lead. The Conservatives need to capture these seats to have a chance of winning an overall majority in parliament.

(Reporting by Keith Weir and Estelle Shirbon; Editing by Louise Ireland and Stefano Ambrogi)