The gathering political storm has already swept away the phase of calm in financial markets that was ushered in by the European Central Bank's lending of more than 1 trillion euros to banks in two operations in December and February.

Bond yields in Spain, which ousted its Socialist government in November, have become a day-to-day barometer of whether Europe is climbing out of the crisis or sinking back into it. Ten-year yields rose above 6 percent on April 23 and were at 5.80 percent at 10:45 a.m. Brussels time today. The euro headed for its biggest weekly decline in a month, trading at $1.3129, down 0.8 percent for the week.

The vote in Greece, the epicenter of the euro crisis, may amplify the mutiny against the wage and spending cuts and tax increases that are conditions for drawing on financial aid and staying in the currency.

“The biggest risk for markets is that in Greece we just don't get a government and it becomes completely unclear whether or not Greece will be able to comply with the austerity program,” said Holger Schmieding, chief economist at Berenberg Bank in London. “If we're unlucky on Monday morning, markets may wonder whether Greece will be out of the euro within a few months.”

Political Horse Race

Greece's first ballot since then-newly installed Prime Minister George Papandreou uncovered a 20 billion-euro budget hole in October 2009 may yield a parliament with as many as 10 parties, making it hard to form a government with a clear mandate.

Papandreou was replaced by non-partisan former central banker Lucas Papademos last November after an aborted call for a referendum on budget cuts led Germany and France to make a precedent-setting threat to expel Greece from the euro.

Greece's best-case scenario would be a coalition of convenience between Pasok and New Democracy, the two parties that have alternated in power since military rule ended in 1974 and are signatories of the austerity program, Schmieding said.

The two parties, never before joined in a unity government, would combine for 32.6 percent of the vote, possibly enough to eke out a majority under Greek electoral rules, according to the final pre-election poll on April 20.

Europe's crisis pervades the presidential campaign in France, with incumbent Nicolas Sarkozy vowing to match Germany's economic successes and claiming that Socialist Francois Hollande would make the country look more like Greece.

France's loss of its AAA rating from Standard & Poor's in January and Sarkozy's vote-seeking tilt against austerity have shattered the image of the German-French “Merkozy” duo in command of Europe's crisis management.

Sarkozy began the campaign planning on joint appearances with Merkel to burnish his European leadership claim, only to end it by denouncing Muslim immigration and bashing the ECB's German-tinged inflation-fighting orthodoxy.

Hollande, ahead in the polls throughout the campaign, has echoed the criticism of the central bank and promised to renegotiate a deficit-limitation pact at the core of Merkel's approach to the crisis.

In the only pre-election debate, on May 2, Hollande claimed credit for shifting the conversation from “austerity” to “growth.” The challenge to Merkel is mostly rhetorical, said Mujtaba Rahman, an analyst at Eurasia Group in New York.

“It's going to be easy for Merkel to sign up to Hollande's growth agenda because it means very little in terms of actual substance,” Rahman said. “However, on the fiscal side, much of Merkel's agenda is now codified in EU legislation.”

State Votes

Merkel has her own electoral business to attend to, with her party vying to hold on to a share of power in the northern state of Schleswig-Holstein and to re-enter the government of North Rhine-Westphalia, the largest state, a week later.

In Italy, mayoral elections on May 6-7 in more than 1,000 cities will be a first gauge of the mood since Mario Monti took over from Silvio Berlusconi as prime minister in November and a corruption scandal shattered the top ranks of the Northern League, Berlusconi's former coalition partner.

Monti's technocratic government has imposed 20 billion euros in savings, deepening Italy's fourth recession since 2001. An economics professor and former European commissioner, Monti has said he won't run in national elections due by May 2013.

“It is rare that a single day offers the chance to gauge the political mood in the euro zone so widely,” Janet Henry, chief European economist at HSBC Holdings Plc, said in a research note. “This election blitz could have far-reaching consequences for further efforts to tackle the debt crisis.”

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