Anti-euro populists surge in Finnish election

HELSINKI (Reuters) - An anti-euro populist party made dramatic gains in Finland's parliamentary election on Sunday, crimping its pro-Europe government and raising the risk of disruptions to an EU bailout of Portugal.

With 38 percent of ballots counted, the centre-right National Coalition party, second largest partner in the outgoing governing bloc, led with 20.1 percent of the vote and the main opposition Social Democrats followed with 19.5 percent.

But the anti-euro True Finns looked set to take 18.6 percent and third place, more than quadrupling their share of the vote since the last election in 2007 and raising difficult questions about future Finnish policy in the European Union.

Finland's parliament, unlike others in the euro zone, has the right to vote on EU requests for bailout funds, meaning it could hold up costly plans to shore up Portugal and bring stability to debt markets.

Timo Soini, the True Finns leader, said the party would at least "get an invitation to talks" on a new government, which is expected to be formed in mid- to late May.

Sunday's outcome would likely mean the National Coalition taking the lead in forming a new coalition but needing other parties to constitute a majority in the 200-seat parliament.

Some analysts say it could even invite in the True Finns, if the party secured enough votes to be a governing kingmaker.

The current largest governing party, the Centre Party of Prime Minister Mari Kiviniemi, was set to come fourth in the vote on 17.4 percent, the count of advance votes showed.

Full, official results were due later on Sunday.

NATIONALIST, LESS EUROPE-ORIENTED SHIFT?

"Whether the True Finns will really (emerge) as the champions of the elections is still uncertain. But I think we will clearly get a more nationalistic, more conservative, less European-oriented government in Finland," ING senior economist Carsten Brzeski told Reuters.

National Coalition minister Jan Vapaavuori on Friday played down fears of an anti-euro government. The True Finns, he said, would probably be asked to tone down their rhetoric as a condition of joining the coalition.

The Social Democrats, who are critical of the bailout but supportive of the EU, would be easier to get on board, he said.

"I'm sure that Finland will be in line with other European countries in the next government," he told Reuters.

The True Finns have said they have no intention of backing down from their opposition to the bailout. But analysts said the party and its charismatic leader, Timo Soini, would probably compromise if needed to obtain a share of power.

"It would be strange for a party to grow so much but not want to use that power and enter government," said Kimmo Gronlund, research director at Abo University.

Support for the True Finns has soared since the 2007 election, partly driven by anxiety over unemployment and pension cutbacks. The party leans to the left on social welfare issues.

"Pensioners have been treated very badly. The allowances have come down, and I'm expecting they will be lowered more," said pensioner Liisa Valkama, as she waited to vote.

Finland's rebound from the global financial crisis has done little to boost the number of jobs. Even its flagship company, Nokia, is struggling to compete with Apple Inc and Asian handset makers, and is expected to cut jobs.

"They have strict opinions about everything," one young woman, who gave her name as Eevi, said of the True Finns. "Finnish people have always been very open. I wonder why we are now pulling off, closing up again?"

(Writing by Ritsuko Ando, Editing by Mark Heinrich)