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UK Tories win; Brexit fears may yet spook markets

The Conservative Party has secured a surprise victory in the U.K. general election, confounding numerous pre-election polls which had pointed to a neck-and-neck race with the opposition Labour Party.

At around 12:30 p.m. London time, the BBC state broadcasting service reported that the incumbent Conservatives had won at least 326 seats, giving them a ruling majority in parliament.

Labour won 232 seats and former coalition partner Liberal Democrats had a miniscule eight seats.

"Majority government is more accountable," newly re-elected Prime Minister David Cameron said in a speech delivered from the doorstep of 10 Downing Street in London, after thanking former coalition partner ex-Liberal Democrat leader Nick Clegg.

Leon Neal | AFP | Getty Images

Cameron also pledged to go ahead with his promised referendum on the U.K.'s continued membership of the European Union.

"Yes, we will deliver that in-out-referendum on Europe," Cameron confirmed in his Downing Street speech.

The uncertainty around quitting the economic and political union in a so-called Brexit could spook markets longer-term.

"From the perspective of London's European partners... (the) result is the worst possible outcome: Both emboldened by his strong performance and under pressure from his euroskeptic backbenchers, Cameron can be expected to be a tough negotiation partner in the context of the now virtually-inevitable referendum on EU membership," said Teneo Intelligence analysts in a research note on Friday.

UK 2015 election results
PartySeats
Conservative
Labour
Liberal Democrats
UK Independence Party
Green Party
Scottish National Party
Others
Total seats declared:
/ 650


3 parties without leaders

Ed Miliband, the leader of the U.K.'s Labour Party, resigned on Friday, after it became clear his party had lost to the incumbent Conservatives.

"I am truly sorry I did not succeed," Miliband told a news conference in London.

"We have come back before and this party will come back again," Miliband added.

Miliband's resignation means that three major U.K. opposition parties are now without leaders.

The leaders of the Liberal Democrat party—previously the ruling Conservatives' coalition partner—and the populist U.K. Independence Party (UKIP) resigned following their poor showing at the polls.

"I always expected this election to be exceptionally difficult for the Liberal Democrats...We have suffered catastrophic losses," Lib Dem leader Clegg told a news conference before announcing his resignation.

"Fear and grievance have won, liberalism has lost," he added in a speech that was received enthusiastically on Twitter.

Miliband held his Doncaster North seat, but other big name Labour politicians lost theirs. These included opposition finance minister, Ed Balls, who had been touted as a future leader of the party.

Multiple key Lib Dem figures lost their seats, including incumbent Business Secretary Vince Cable and Lib Dem Chief Secretary to the Treasury, Danny Alexander, in Inverness, Scotland.

'More business friendly'

Sterling jumped to its highest against the U.S. dollar since the end of February and the U.K.'s FTSE 100 index provisionally closed up 2.3 percent on news of the Conservative victory.

"Sterling has surged and other markets are likely to follow suit. Gilts will likely benefit from the fact that the Conservatives will likely be able to press ahead with their plans to reduce the deficit more quickly than Labour would have done," Howard Archer, chief U.K. and European economist at IHS Global Insight, said in a note Friday.

"The fact that the election has seemingly delivered a government that could well survive for a full term – and crucially avoided the need for another general election later this year – is good for stability which should be supportive to economic activity."

He added that the Conservatives were seen as "more business friendly" than the other parties.

Scotland turns yellow

North of the border, the SNP made headlines, wiping out nearly all opposition to claim 56 out of 59 seats in Scotland.

Notably, Labour's campaign chief Douglas Alexander lost his seat to a 20-year-old SNP candidate, the youngest U.K. member of parliament in centuries.

The leader of Scottish Labour, Jim Murphy, also lost his seat.