U.S. stocks futures rally after centrist takes first round in French election

NEW YORK (Reuters) - U.S. stock index futures rose sharply on Sunday on relief that centrist Emmanuel Macron took the first round of voting in the French presidential election, reducing the prospect of an anti-establishment market shock.

Macron will face far-right leader Marine Le Pen in a May 7 runoff and opinion polls on Sunday had him easily winning the final clash.

"While markets had deemed a Le Pen-Macron (run-off) as the most likely outcome, there was an element of uncertainty," said Mohamed El-Erian, chief economic adviser at Allianz. "Now that this has been lifted, there will be a relief rally, bolstered by how quickly the mainstream candidates... have endorsed Macron, the market’s favorite."

Defeated Socialist candidate Benoit Hamon, Socialist Prime Minister Bernard Cazeneuve and defeated right-wing candidate Francois Fillon all urged voters to rally behind Macron in the second round. Markets had also been nervous of the possibility that far-left contender Jean-Luc Melenchon might make the run-off.

"On the face of it, this looks like a rebuke to populism, and a solid vote in favor of a more solidly integrated Europe," said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.

Sunday's sharp moves point to an unwinding of bets taken in the past few days as traders turned defensive ahead of the vote.

Prices for protection against wild swings in stocks, bonds and the euro surged last week ahead of the election as polls tightened and investors fretted that another unforseen election outcome could upend a solid start to the year for risk assets.

(Reporting by Rodrigo Campos, Jennifer Ablan, Saqib Iqbal Ahmed and Megan Davies)