SCENARIOS - Possible 2010 election outcomes, market impact

By Peter Apps, Political Risk Correspondent

LONDON (Reuters) - Reuters has been polling financial market and political analysts on the likely outcome of a parliamentary election that must take place by June.

Below are the potential outcomes, together with analysis of their likely market and political impact.

LARGE CONSERVATIVE VICTORY -- 48 PERCENT LIKELIHOOD

Most political and market analysts expect the Conservatives to win by more than Labour's current effective majority of 62. This would be seen giving their leader David Cameron a mandate strong enough to carry out broad spending cuts to address a yawning budget deficit.

The Conservatives have suggested they would issue a budget swiftly after any election victory, and this would be closely watched by financial markets and ratings agencies.

How markets react will depend how heavily they have factored in a Conservative victory in the preceding months, but clarity over policy and a stable, survivable majority would probably be positive in the short term for sterling and gilts.

Stock markets would probably have a more mixed reaction, with some firms losing out from the end of Labour stimulus spending but others gaining from more outsourcing to save money under the Conservatives.

Even with a big majority, pushing through spending cuts will be far from easy. Analysts expect a rise in industrial unrest both before and after any Conservative takeover.