* Shares nudge higher, Italy strong after Renzi election win
* Results help Euro lift off 3-month low caused by ECB
* Poroshenko's win raises hopes of political stability in
By Marc Jones
LONDON, May 26 Italian assets surged and German
shares hit all-time highs on Monday as solid election showings
by pro-European forces in both countries provided an antidote to
Eurosceptic gains in France, the UK and Greece.
Though nationalists scored stunning victories in a number of
weekend votes, Italy's pro-European Prime Minister Matteo
Renzi's centre-left Democratic Party was on course for a
resounding win over the anti-establishment 5-Star Movement of
former comic Beppe Grillo.
For investors, it was a relief after pre-election polls had
pointed to a much closer contest that would have raised fresh
questions over the country's ability to keep its already wobbly
economic reform programme on track.
Italian shares jumped almost 3 percent in heavier-
than-usual trade and benchmark government bonds
were on course for their biggest one-day percentage gain in
almost a year.
In Germany, where Chancellor Angela Merkel's Christian
Democrats finished top, the Dax index climbed 1 percent
to a record high, while there was a bounce for Greek stocks
and in the currency market the euro pulled up from
a three-month low.
"In Italy we've seen voters endorsing the policies of Renzi
whose party came out as the strongest party in these elections
and this seems to be taken very positively by the market," said
Christian Lenk, a fixed income strategist at DZ Bank.
"We have not seen spectacular outcomes in terms of
Eurosceptic parties in the weaker countries except for Greece
... and that seems enough to draw investors back."
Asian shares had also had a solid day, hitting one-year
highs thanks to a strong session on Wall Street on Friday, and
also helped by an apparently decisive win for billionaire Petro
Poroshenko in Ukraine's presidential election. [ID:nL6N0OC1EO ]
MSCI's broadest index of Asia-Pacific shares outside Japan
was last trading up 0.1 percent. Japan's Nikkei
share average gained 1.0 percent to a 7-week high,
though trade was slow due to market holidays in London and New
Exit polls in Ukraine gave Poroshenko, a confectionery
magnate with long experience in government and diplomatic ties
to both Russia and the West, more than 55 percent of the vote.
Results will not be announced until later on Monday but
runner-up Yulia Tymoshenko, on 13 percent, made clear she would
concede, sparing the country a tense three weeks until a runoff
round would have been held.
"Poroshenko's victory in the first round of the vote is
positive for political stability, even though there remains a
huge uncertainty and we need to keep an eye on further
developments," said Junya Tanase, chief currency strategist at
JPMorgan Chase Bank in Tokyo.
The improved mood lifted Russian stocks 1 percent to
three-month highs and put pressure on the safe-haven yen, which
fetched 101.94 yen to the dollar in European trade, near
its lowest level in more than a week.
The euro climbed to $1.3642 on the Italian election relief,
though it remained within touching distance of a three-month low
having been pushed down in recent weeks by strong signals the
European Central Bank will cut interest rates next week.
Among the many Eurosceptic successes, France's far right
National Front scored a stunning victory that Prime Minister
Manuel Valls called "an earthquake" for the country and for
Greece's radical leftist Syriza party also rode a wave of
anti-austerity anger to win the country's EU election, though it
failed to deliver a knockout blow against Prime Minister Antonis
Samaras's government that some had feared.
As worries over Ukraine eased, traditional safe-haven gold
shuffled back to $1,291 an ounce and Brent crude
fell below $110 a barrel, dipping further from last week's
two-and-a-half month high.
Among emerging markets, most Asian currencies rose although
the Thai baht continued to underperform in the wake of a
Thai army leader General Prayuth Chan-ocha said on Monday he
had been formally endorsed by the king as head of a military
council that will run the country, and warned he would use force
if political protests flared up again.
(Additional Reporting by Emelia Sithole-Matarise; Editing by
John Stonestreet and Alister Doyle)