Cypriots voted on Sunday in a runoff to elect a president who must clinch a bailout deal before the island nation plunges into a financial meltdown that would revive the euro zone debt crisis.

Conservative leader Nicos Anastasiades, who favours hammering out a quick deal with foreign lenders, is tipped to win against Communist-backed rival Stavros Malas, who is more wary of the austerity terms accompanying any rescue.

Financial markets are hoping for an Anastasiades victory to speed up a joint rescue by the European Union and International Monetary Fund before the island runs out of cash and derails fragile confidence returning to the euro zone.

The 66-year-old lawyer took more than 45 per cent of the vote in the first round in the Greek-speaking Cypriot south, easily beating 45-year-old geneticist Malas, who took 27 per cent.

Polls close at 1600 GMT, with the result expected soon afterwards.

The winner will take the reins of a Mediterranean nation ravaged by its worst economic crisis in four decades, with unemployment at a record high of 15 per cent. Pay cuts and tax hikes ahead of a bailout have further soured the national mood.

"We have to choose between the lesser of two evils," said Georgia Xenophondos, a 23-year-old receptionist who voted for a third contender in the first round. She now plans to vote for the conservative chief, but is wary of backing more austerity.

"We are already damaged by it and I don't know if we can take anymore," she said. "We've hit poverty, unemployment and lost respect from the EU - things we didn't see five years ago."

Newspapers reflected the grim outlook, warning of an uphill climb for the new president. One described it as walking towards "Calvary", where the Bible says Jesus was crucified.

"He will be plunged straight into the deep end, and failure is not an option," the Simerini daily wrote.

Fewer voters were expected to show up at the polls than on February 17 after the third-placed candidate refused to back either contender in the runoff, boosting Anastasiades's chances.

About a half million Cypriots are eligible to vote but many are expected to abstain or cast blank votes in protest. Both contenders have implored Cypriots not to shirk their duty.

"These elections are so crucial, that really, nobody can turn themselves into a passive spectator," Malas said as he voted on the outskirts of the divided capital Nicosia.

CROSSROAD

Talks to rescue Nicosia have dragged on eight months since it first sought help, after a Greek sovereign debt restructuring saddled its banks with losses.

Virtually all rescue options - from a bailout loan to a debt writedown or slapping losses on bank depositors - are proving unfeasible because they push Cypriot debt up to unmanageable levels or risk hurting investor sentiment elsewhere in the bloc.

German misgivings about the nation's commitment to fighting money laundering and strong financial ties with Russia have further complicated the negotiations.

European officials want a bailout agreed by the end of March, ensuring no honeymoon period for the new president, who will be sworn in on February 28 and assume power on March 1.

Longstanding anger over the island's 40-year-old division into the Greek-speaking south and Turkish north has been relegated to a distant second behind the country's financial quagmire as an election issue this year.

"Cyprus is at a crossroads," Anastasiades said as he voted in the port town of Limassol, surrounded by his grandchildren.

"From tomorrow, whoever is elected, should be aware he has to deal with important, critical problems which our country is facing and the immediate handling of the economic crisis."

A heavy smoker known for his no-nonsense style, Anastasiades is widely respected but suffered political humiliation nine years ago when he supported a UN blueprint to reunify the island that was later rejected by the public.

He has suggested the island may even need a bridging loan to tide it over until a rescue is nailed down.

His younger rival Malas is handicapped by the support of the incumbent Communists who are perceived as having mismanaged the economic crisis and a munitions blast in 2011.

Still, he is expected to get a boost from his pledges to drive a hard bargain with lenders and anti-austerity rhetoric that resonates with many Cypriots struggling to make ends meet.

"Whatever happens in this vote, the day after is going to be very difficult for Cyprus," said Demetris Charalambous, a 56-year-old convenience store owner. "People are really depressed." – Reuters