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Markets watch as UK makes its once-in-a-generation decision

Global stock markets mostly gained on Thursday, as the British public went to the polls to vote on whether to remain in or leave the European Union (EU). Analysts pointed to "tough choices" for the U.K., whatever the result.

Voting took place between 7:00 a.m. and 10:00 p.m. London time, during which period media reporting restrictions were in place. An indication of the final result could emerge on Friday from 4:00 a.m. London time onward, after the votes have been counted and called in 382 local voting areas, relating to 12 regions in the U.K.

European stock markets traded on a tear early on Thursday, with the U.K.'s benchmark FTSE 100 index 1.5 percent higher at one stage. Stock indexes pared gains in later trade, but still closed higher, with the FTSE 100 provisionally up 1.2 percent. The French CAC ended just under 2 percent higher, with the German DAX up around 1.9 percent.

Thursday is the culmination of four months of fraught campaigning by the leave and remain groups, who have been trying to win over the British public to their arguments over whether the U.K. would be better-off staying in the 28-country economic and political bloc or not.

Chris Ratcliffe/Bloomberg via Getty Images

The main points of division among the public are the costs of EU membership, the benefits of such membership to the economy, sovereignty and immigration with widely differing data used by campaigners on both sides.

Opinion polls have been close throughout the campaign and remain too close to call with a significant number of voters undecided up to the last-minute. Turnout is expected to be high with around 46.5 million people eligible to vote, according to the U.K.'s Electoral Commission.

Markets were given a boost by the polls released on the eve of the vote by ComRes, conducted for the Daily Mail newspaper and ITV television, and YouGov for The Times newspaper in London, which showed a last-minute increase in the number of voters supporting the remain campaign. It should be noted that two other polls, conducted by Opinium and TNS and also published on Wednesday, gave the leave vote a narrow lead.

On Thursday, Ipsos Mori released the results of a poll taken the previous Tuesday and Wednesday, showing 52 percent voting for remain and 48 percent leave.

The British pound rose to a six-month high against the dollar following the polls, touching $1.490 around midday London time. It then pared some gains, trading at $1.482 when European stock markets closed.

U.S. stock indexes rallied on Thursday, with the Dow Jones industrial average more than 150 points higher in late-morning trade.

"I think the market's already voted. ... It looks like they're looking for the stay vote to prevail," Adam Sarhan, CEO of Sarhan Capital, said.

Investors were more cautious in Asia, where stocks traded mixed on Thursday.

Several large banks have issued warnings over the possible ramifications of a Brexit vote with market volatility and a decline in sterling predicted should the majority of U.K. voters opt to leave the EU.

Tough choices post vote

Whatever the outcome of the vote, analysts are pointing to difficult choices still need to be made by the U.K. government and say that the future of Prime Minister David Cameron, who has led the remain campaign, remains in the balance.

If a Brexit result is announced, Cameron will at some time have to activate Article 50 of the 2009 Lisbon Treaty which sets in motion the process of leaving the EU which can take up to two years to complete. Once activated, there is seen as no easy way back for the U.K. (all other 27 EU nations would have to agree to allow the U.K. to return).

Craig Erlam, senior market analysts at OANDA, said the referendum was "arguably the biggest risk event of the year."

"With a number of polls suggesting the race is neck and neck, I would expect the markets to be quite volatile at times over the next 24 hours. Moves in the pound in particular could be quite wild once the voting closes this evening and the results start to be released from around 1am (U.K.) onwards," he said.

Most analysts retained their call for the U.K. to remain in the EU. Carsten Nickel, deputy director of research at Teneo Intelligence, said in a note on Wednesday that the risk advisory team retained its long-standing call unchanged.

"The U.K. is marginally more likely to remain a member than to leave the EU (60/40 percent)," he said.

Nickel noted that even if the U.K. votes to remain in the EU, "structural problems behind the populist surge are far from resolved" and said there was arguably no "positive outcome" from the vote.

"Any U.K. government would face tough choices post-Brexit: either fail to deliver on limiting immigration to secure full access to the single market, or risk limited trade-deals (which could take years to conclude) to regain full control over the UK's borders. In either case, a public backlash and continued populism are the risks," Nickel said.

"Even if the U.K. stays, structural problems behind the populist surge are far from resolved: Labour remains out of touch with middle-class voters; the majoritarian electoral system denies some 5 million UKIP (U.K. independence Party) voters representation; London appears ever more estranged – economically and culturally – from the rest of the country; inequality, immigration and the future of public services continue to cause concern among voters. The question of a regional devolution of powers, most notably to Scotland, add to these complications," he said.

—With contribution from CNBC's Katy Barnato and Evelyn Cheng. Follow CNBC International on Twitter and Facebook.