UPDATE 1-UK Conservatives slim lead narrows in parsimonious seats

Thu Mar 4, 2010 1:42pm EST Related News UK Conservatives have 2 point lead in marginal seatsThu, Mar 4 2010UPDATE 2-UK opposition says Labour victory would weaken poundTue, Mar 2 2010UK opposition says Labour victory would weaken poundTue, Mar 2 2010UK"s ruling Labour given opinion poll boostMon, Mar 1 2010British opposition may tone down austerity messageMon, Mar 1 2010

* Opposition lead narrows to 2 points in marginal seats-poll

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* Findings suggest election more likely to be inconclusive

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LONDON, March 4 (Reuters) - The opposition Conservatives"lead over ruling Labour in 60 crucial constituencies hasnarrowed to two points, a poll showed on Thursday, adding to theview that Britain"s looming election will be inconclusive.

The centre-right Conservatives, seeking to end 13 years ofLabour rule, have been ahead in national polls for over twoyears but their once-commanding lead has shrunk as the electionnears. It is widely expected to take place on May 6.

The YouGov/Channel 4 News survey found that 39 percent ofthose polled in so-called "marginal seats" -- where the contestwill be tightest -- would vote Conservative, while 37 percentwould support Labour.

The Conservatives had a seven-point lead when the poll waslast conducted in February 2009.

Channel 4 News said the gap between the two main parties inthe 60 marginal seats is the narrowest since the autumn of 2007,months after Labour"s Gordon Brown took over as prime ministerfrom Tony Blair, who stepped down in mid-term.

The channel"s political editor Gary Gibbon said the resultpointed to a "hung parliament" in which the Conservatives wouldhave the largest number of seats but would be 11 seats short ofa majority. Britain last had a hung parliament in 1974.

Financial markets, which are focused on Britain"s recorddeficit and want the next government to tackle it aggressively,do not like the prospect of a hung parliament.

They fear wrangling between the parties could delay painfulbut necessary public spending cuts.

The Conservatives have not said what they would do in theevent of a hung parliament in which they were the biggest party.

They would have the option of forming a government alone andseeking support from other parties on an issue-by-issue basis toget legislation through, or of trying to form a coalition --most realistically with the third party, the Liberal Democrats.

Most opinion polls do not focus on specific constituenciesbut instead seek to give a snapshot of public opinionnationwide.

The Conservatives consistently had a double-digit lead untillate January, when it fell to single digits.

In Britain, percentages won by each party nationally matterless than the number of seats won as it is the party with thelargest number of seats in parliament that forms the government.

It would be possible for the Conservatives to win a greatershare of the national vote but still win fewer seats thanLabour. Four national polls since Feb. 22 have pointed toprecisely that outcome.

The Channel 4 News poll looked at only 60 key seats out ofthe total of 650 constituencies that will be contested.

It said it had selected those 60 constituencies because theywere won by Labour at the last election, in 2005, but with atight lead. The Conservatives need to capture these seats tohave a chance of winning an overall majority in parliament. (Reporting by Keith Weir and Estelle Shirbon; Editing by LouiseIreland and Stefano Ambrogi)

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