Poland's centre-right parties crushed the ruling left in parliamentary elections, early results showed on Monday, but faced tough coalition talks on splits over how far to go in embracing the free market.
The conservative Law and Justice had a small lead over the pro-business Civic Platform, disappointing investors who piled into the Polish zloty, bonds and stocks earlier when surveys suggested free market champions would head the next cabinet.
Economists said the zloty was set to weaken when markets opened on Monday, also reflecting concern the campaign for presidential polls on October 9 may disrupt coalition talks.
"The presidential campaign is still going on, so the battle between the Platform and Law and Justice will continue," said Ryszard Petru, chief economist at Bank BPH in Warsaw.
Law and Justice had 26.6 percent and Civic Platform 24.1 percent after ballots from 60 percent of voting districts were counted, the electoral commission said.
The parties, enjoying the biggest win for the heirs of the Solidarity movement which helped trigger the fall of communism in 1989, said they wanted to rule together in the European Union's biggest new member and that talks could start this week.
"We have long said we want this coalition and there are no reasons why it shouldn't happen," said Law and Justice leader Jaroslaw Kaczynski, the likely next prime minister.
CORRUPTION
Both parties promise to create more jobs, lower taxes and weed out corruption that tainted the four-year rule of the Democratic Left Alliance, reformed former communists.
But financial markets believe a coalition led by the Civic Platform would more aggressively tackle Poland's pressing economic problems of unemployment, at 18 percent the highest in the 25-nation EU, bloated budgets and costly social security.
Reflecting a wider European debate, the two parties also differ on how much welfare Poland, whose wealth levels are half the EU average, can afford.
The Civic Platform, which has pledged to move fast with tax cuts, deregulation, privatisation and euro adoption, barely hid its disappointment that the conservatives' tough talk on crime and vows to uphold the welfare state secured them victory.
"I think that voters with socialist views were orphaned by the collapse of the left and shifted to Law and Justice," said Bronislaw Komorowski, a Civic Platform leader.
"The Law and Justice programme at its core is socialist and Poland is fed up with socialism."
The October 9 presidential vote, which could go into a run-off two weeks later, pits Civic Platform leader and front-runner Donald Tusk against conservative Warsaw mayor Lech Kaczynski, twin brother of fellow Law and Justice leader.
The parliamentary campaign exposed the rift between the growing middle class, which wants more free market openness, and those who feel left behind after 16 years of painful reforms.
Political analysts say the Kaczynskis cleverly tapped that anger, painting the Civic Platform proposal of a 15 percent flat tax as a gift for the rich at the expense of the poor.
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