Uncertainty stemming from Italy's inconclusive election makes it more likely the European Central Bank will have to help struggling countries such as Spain by buying their bonds, a Reuters poll showed on Thursday.
The huge protest vote by Italians against economic hardship sent European financial markets reeling this week as the result left a power vacuum in the euro zone's third-largest economy and one of its most vulnerable.
Forty-four out of 55 economists polled this week said the result made it more likely the ECB will activate its bond purchase program, called Outright Monetary Transactions (OMTs), designed to cut borrowing costs for crisis-hit euro zone countries.
The remaining 11 said it would not.
Underlining how the problems of individual countries resonate through the currency union, Spain - not Italy - remains seen as the most likely to seek ECB help through the OMTs.
"The potential for contagion as a result of uncertainty and volatility, and a further widening of spreads, has increased the probability that Spain may trigger it," said economist Azad Zangana at Schroders, an asset management company in London.
Twenty-two economists thought Spain would probably access the OMT program this year, and 18 said Italy. A handful, including Schroders' Zangana, said Portugal and Ireland.
Spanish Economy Minister Luis de Guindos said on Tuesday Madrid was no closer to seeking bond-buying help than it was before Italy's election.
Forecasts in the poll for the timing of an OMT request were spread across this year.
A growing minority of respondents - 22 out of 76, compared with 18 last month - also expect that, eventually, the ECB will cut its main refinancing rate from 0.75 percent to a new record low of 0.5 percent.
Complicating the outlook are an ambiguous set of economic data over the last month.
Euro zone consumer and investor confidence has been rising steadily since the start of the year, but that hasn't so far translated into an improvement in business surveys.
Still, given that the economic malaise is unlikely to end soon, Italy's political stalemate now tops the list of risks to the euro zone's financial stability.
Even days after the election, markets have demonstrated the importance of the ECB's backstops.
The central bank's promise to buy bonds from struggling states, if needed, helped Italian government bonds pare losses on Thursday. Bond strategists say it will continue to do so.
FAR FROM THE EXIT
ECB President Mario Draghi said late on Wednesday the central bank is not about to remove the crisis measures it deployed to help the ailing euro zone economy, saying he is "far from having an exit in mind".
Indeed the poll's consensus suggested the ECB would keep its main refinancing interest rate on hold at 0.75 percent deep into next year at the earliest, although there were the growing expectations for a rate cut to 0.5 percent.
Juergen Michels, economist at Citi and one of the most bearish forecasters on the euro zone, expects a rate cut next quarter to 0.5 percent, citing the weak economy and upwards pressure on the euro.
"We expect another cut to 0.25 percent by the year end, probably joined by a cut in the deposit rate to minus 0.25 percent," he said.
The poll put a median 90 percent chance there will be no change in interest rates at next Thursday's meeting.
The ECB's staff also publishes their quarterly outlook for the euro zone economy next week. Thirty-four out of 52 analysts think they will issue a gloomier projection for 2013 compared with December's forecasts.
Economists polled by Reuters earlier this month reckoned the euro zone economy might pull itself out of recession this quarter, but no-one saw any prospect of a major upturn thereafter.
(Polling by Shaloo Shrivastava. Editing by Jeremy Gaunt.)