Britain's ruling Labour party will remain the largest in parliament, but fall short of an overall majority after an election expected on May 6, an opinion poll showed on Wednesday.

The daily poll in the Sun newspaper indicated the opposition Conservatives would win 36 percent of votes at the election, down three percentage points from Tuesday's poll.   

Support for Labour fell two points to 32 percent, but would still be enough to give Prime Minister Gordon Brown's party enough of the vote to win the most seats.

Under Britain's first past the post electoral system, the Conservatives require a lead of about 10 percentage points to overcome Labour's current working majority of 57 and win enough seats to gain control without forming a coalition.

The latest opinion poll reflects an outcome that would require Labour either to form a minority government or join forces with smaller parties to create a coalition administration -- rare in modern British political history.

Financial markets are concerned that such an election result would exacerbate uncertainty about Britain's record budget deficit.   

Labour is enshrining in law its pledge to halve the deficit -- set to top 12 percent of gross domestic product this year -- by 2013/14, but economists argue more detail is needed to establish the credibility of the government's plans.

The Conservatives want to start cutting the deficit earlier and faster but have given few clues on how they would do that. - Reuters