–Updates, Recasts Earlier Versions
–Results Erratic; Conservatives Fail To Win Some Key Target Range Seats
–UK Political Leaders Mull Options For Minority Govt. Or Coalition

LONDON (MNI), May 7 – The Conservative Party made some surprising
gains in the 2010 General Election in a night of erratic results, but
missed out on a number of key target seats and fell short of an overall
majority, leaving the UK facing the uncertain prospect of a minority
government or some form of coalition.

The outturn left analysts and financial market participants
bemoaning the lack of clarity, with uncertainty over how fiscal
tightening will be implemented. Market reaction was negative,
with sterling soft in thin trade on Friday morning and June gilts down
a full point.

The Conservatives had to secure 326 seats for an outright
majority, but with 615 of the 650 seats declared, they were on 290,
making an overall majority impossible.

Among the potential outturns, the scenario that has emerged
“grants least clarity in terms of what government we will see, and
plausibly least stability in terms of the size of majority commanded by
whoever forms a government,” Malcolm Barr, economist at JP Morgan, said.

Looking at seats in the key target range of 300 to 340 for the
Conservatives, the table following this piece highlights how the
Conservatives have only one some one in four of them. They are projected
to end up some 25 seats short of their targets.

Leading politicians moved to stake out ground ahead of
negotiations. Peter Mandelson, the business secretary and a key Labour
strategist, made clear in a number of interviews that Labour would be
ready to do a deal with the third party, the Liberal Democrats, on
the latter’s demand for voting reform.

The Conservatives could form a coalition with the unionists, but it
will still be a struggle to form a workable majority. In Northern
Ireland the Ulster Conservative and Unionists lost their last Member of
Parliament in Thursday vote and the Democratic Unionist Party has 8 MPS.

Ed Miliband, Labour’s environment minister recycled the old
saying – ‘the people have spoken, but it is not clear what they have
said’.

Conservative leader David Cameron said Labour, under Prime Minister
Gordon Brown, had lost the mandate to govern while LibDem leader Nick
Clegg said called for time to reflect.

“I really think it would be best if everyone just take a bit of
time, see what the final result is and then take it from there,” he
said.

With the possibility of vote recounts, and even legal challenges
contesting the outturn in some seats, it could take weeks for a
government to be formed.

–London newsroom: 4420 7862 7492; email:drobinson@marketnews.com
lcommons@marketnews.com

[TOPICS: MABDS$,M$B$$$,MT$$$$]