Berlusconi poll win could boost Mediaset, builders

MILAN (Reuters) - A likely victory for conservative leader Silvio Berlusconi in Italy's general election could boost his own Mediaset company's shares and benefit builders because of planned infrastructure spending.

A clear victory by either side could also help Italian government bonds recoup some of the ground they lost to German Bunds in recent weeks on fears of a political stalemate, analysts said on Monday,.

Shares in Italy's biggest private broadcaster Mediaset lost as much as 2.9 percent when first exit polls failed to hand a clear lead to Berlusconi.

But as pollsters' projections based on early results gave Berlusconi a lead of between 4.6 and 9.1 points in the Senate, the stock pared losses to close down 0.7 percent.

The polls made earlier predictions from exit polls of a hung parliament -- with the centre-left controlling the upper house -- less likely.

"With a clear victory (for Berlusconi) Mediaset could benefit from a rally which would, however, be purely speculative as fundamentals remain the same," said an analyst who declined to be named.

An unclear outcome would be the worst scenario for both stocks and bonds, as it would leave the country adrift in the face of a sharp economic slowdown.

"For sure the (stock) market would not welcome a draw or a crippled victory by either side", said Pio De Gregorio, head of business intelligence at Centrobanca.

"It could weigh negatively ... (But) the economic policy of any future government will be constrained by the economic downturn, which will force it to pay attention to the budget," De Gregorio said.

In an interview with Reuters on Friday, analyst Alexander Kockerbeck at credit ratings agency Moody's said the similarity in the political programs of the two main parties mirrored the limited options in economic policy.

READY TO SPEND?

Despite the need to rein in public spending in the face of slowing growth, a centre-right government will be readier to invest in transport and energy infrastructure, De Gregorio said.

Shares in cement maker Italcementi closed up 3.5 percent against a 1.1 percent fall in DJ Stoxx index of European construction companies. Italy's largest builder Impregilo rose 2.2 percent.

Shares in ailing carrier Alitalia, which the outgoing government has been trying to sell to Air France-KLM, jumped 11.1 percent by the end of the session. Berlusconi has said he favors an Italian buyer, but traders and analysts said options for the loss-making airline seemed limited.

"I don't see how one government or the other could make a difference," a trader said.

A strong majority for Italy's next government could help lower the premiums Italian government BTPs need to offer to investors compared with higher-rated German Bunds.

"Since the beginning of April the spread between (10-year BTPs and Bunds) widened by 5 to 6 basis points. Roughly half of that is due to the political uncertainty," said Alessandro Tentori, fixed income strategist at BNP Paribas in London.

"This component could be reabsorbed in the event of clear victory by one side."

The spread stood at 50 basis points on Monday.

A government led by 71-year-old billionaire Berlusconi could also hasten an awaited liberalization process in the services sector -- giving more incentive for consolidation among municipal utilities.

A source close to the situation said last week Italian utilities Hera, Iride, Enia and Acea would meet to discuss possible mergers after the election.

(Editing by David Holmes)