Hedge funds, private equity eye shift of EU power

* Hope election results will help alter draft laws

* Right wing allies weakened by split with UK Conservatives

By Simon Meads and Laurence Fletcher

LONDON, June 15 (Reuters) - Hedge funds and private equity firms are hoping a resurgent right wing in European politics will give them stronger support when they call for changes to proposed legislation they see threatening their industries.

The coalition of European conservative parties won a decisive victory in elections last week, taking over 260 seats in the European parliament compared with around 160 seats for its socialist rivals. [ID:nL6527170]

"We are viewing this quite positively," said Javier Echarri, secretary general of the European Private Equity and Venture Capital Association.

"[The new parliament members] are expected to be able to deal with financial regulation on a calmer basis with more understanding than the more emotional debate that we have seen in the parliament in past years," Echarri said.

In April the European Commission put forward controversial draft laws that would force discloure of leveraged positions, give regulators more control over borrowing and control over where hedge funds and private equity could sell their products.

Poul Nyrup Rasmussen, leader of the Party of European Socialists, has been a strong voice for regulation, accusing both industries of "greed and excessive risk-taking".

Hedge fund body the Alternative Investment Management Association (AIMA), which represents more than 1,200 firms worldwide, is lobbying for changes to the draft and welcomed the result of the elections.

"At some stage this will come up for a vote ... At that stage the composition (of the parliament) is very important," said AIMA Chief Executive Andrew Baker.

BRITISH INFLUENCE WEAKENS

The decision of Britain's Conservative party to leave the right wing coalition, however, is seen by some as dampening the effect, weakening Britain's ability to fight directly for the industries, some 80 percent of which are based in the UK.

Despite their 25 seats, the Conservatives' decision has hampered their ability to influence the directive by picking up the pivotal rapporteur role -- which AIMA's Baker says is arguably the most important in the process.