INTERNATIONAL. European shares are set to rise and the euro find a foothold on Monday with Greek's pro-bailout parties on course to win a slim majority, easing investor fears of an imminent Greek exit from the euro zone.

Pressure on the borrowing costs of fellow high debtors Spain and Italy could also ease a little.

Official vote projections from Greece's interior ministry showed the conservative New Democracy taking 29.5% of the vote, with SYRIZA - which has threatened to tear up the bailout agreement - in second place with 27.1%. The Socialist PASOK followed in third place with 12.3%.

The euro rallied to a three-week high against the dollar and peripheral euro zone governments bond prices were expected to rise but analysts said the relief could be short-lived.

Investors are worried about the ability of Greece - a country that has entered its fifth year of recession - to keep to austerity measures in return for the bailout money it needs to stay afloat.

"What stands out is how close SYRIZA came... so we expect some robust opposition to the austerity measures," said Daragh Maher, a currency strategist at HSBC.

"Markets will be concerned about how narrow the margin of victory was for ND (New Democracy) and any gains in the euro and other markets will be limited."

The euro rose to around US$1.2730 according to Reuters data in early Australasian Monday trade, from around US$1.2655 late in New York on Friday. It hit its strongest since May 22 according to Reuters charts but then gave back some ground.

The pan-European FTSEurofirst 300 index was expected to claw higher along with other global equities.

The index has fallen more than 10% in the last three months as a worsening debt crisis, Greece's fractured politics and uncertainty over global growth cut short a rally inspired by a glut of cheap European Central Bank cash injections into the banking sector.

"You might see initial relief when investors realize SYRIZA didn't win and so obviously the chances of Greece leaving the single currency have dissipated significantly and that will bring some relief, particularly for equities," said RIA Capital Markets strategist Nick Stamenkovic.

"But the initial reaction will be pretty short-lived when people realize the underlying situation hasn't really changed. The market is going to be concerned that we could be back at the same situation again in a few months time i.e. another election."

SYRIZA leader Alexis Tsipras vowed to continue its fight against the punishing terms of an EU/IMF bailout saving the country from bankruptcy. The two pro-bailout parties, New Democracy and PASOK, looked like they would secure little more than 40% of the vote between them.

Yields on Spanish bonds, which have borne the brunt of the latest flare up in the euro zone debt crisis were likely to fall slightly but remain near the 7 percent level surpassed last week on growing fear over the country's ability to fund itself.

Greece, Ireland and Portugal sought international bailouts shortly after their bond yields reached such peaks.

Pressure on Italian bonds was seen easing too but the fall in yields was tipped to be modest too with doubts about a deal to rescue Spanish banks still plaguing the market. This would likely limit any falls in safe-haven German and U.S. government bonds.

"It's difficult to express relief in the bond market because you can't really express it in Spanish and Italian debt because Spain fortunes are very much tied to their own actions," said Peter Chatwell, a strategist at Credit Agricole.

"Looking at Spain for example, there's supply this week so if there is a rally in Spanish debt I expect there to be a fair appetite to sell into that and use it to set up for the auction (on Thursday)."

The euro zone's fourth biggest economy remains in the firing line because of questions about a deal to recapitalise Spanish banks and after its credit rating was cut to the brink of junk by Moody's and Fitch, raising the prospect the state would need a bailout.

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