Reuters: German voters deal Merkel state election setback [View All]

German voters deal Merkel state election setback

Matthias Inverardi
DUESSELDORF, Germany

Sun May 9, 2010 2:07pm EDT


DUESSELDORF, Germany (Reuters) - Germans punished Chancellor Angela Merkel's center-right coalition in a state election on Sunday, depriving her of a majority in parliament's upper house after she angered many by agreeing to aid Greece.

The loss in the state of North Rhine-Westphalia (NRW) is a blow to Merkel little more than six months into her second term in office and means she will have to rely on opposition parties to deliver her policy agenda, which includes tax cuts.

A result-based projection by ZDF television put Merkel's Christian Democrats (CDU) on 34.3 percent and their Free Democrat (FDP) allies on 6.7 percent, short of a majority and leaving the make-up of NRW's next government unclear.

The Social Democrats (SPD), Germany's main opposition party, polled 34.7 percent of the vote -- just ahead of the CDU, the ZDF projection showed. A final result is due during the night.

"From an investor's perspective, this is another warning signal to foreign capital that not all is well in Europe," said Andrew Bosomworth, a senior portfolio manager at bond giant PIMCO Europe.

"Strong leadership is needed at a time of crisis and what we're likely to see here is a dilution of leadership. This is not something that will increase faith in the euro," he added.

The election was widely regarded as a referendum on Merkel's government and came just two days after her coalition voted in parliament to release billions of euros in aid to debt-stricken Greece -- a move deeply unpopular with the public. .......(more)

The complete piece is at: http://www.reuters.com/article/idUSTRE6481MY20100509