The 17-nation eurozone is on the verge of losing one of its members, more than 50 per cent of investors predicting an exit this year, according to the Bloomberg Global Poll.
As Greece's election impasse threatens to push the debt crisis to new depths and voters balk at austerity, 57 per cent of the 1253 investors, analysts and traders who are Bloomberg subscribers said at least one country would abandon the euro by year-end and 80 per cent expected more pain for Europe's bond markets.
A majority identified a deterioration in Europe as a large threat to the world economy, respondents to the May 8 survey increasingly worried Spain would default and less willing to buy French debt as Francois Hollande took power.
Europe's financial turmoil is reigniting on the second anniversary of the first attempt to stop Greece's fiscal woes turning toxic.
That raises fresh doubt over the crisis-fighting strategy, just as Greece's inconclusive election spurs concern the country may not meet the terms of its international rescues and will seek a solution outside the euro.
"Certainly from a financial perspective the crisis can only intensify," said Michael Derks, a poll respondent and chief strategist at FXPro Financial Services in London.
"We're likely to get more debt restructurings and it would be remarkable if Greece didn't leave the euro within a year."
European stocks slid this week and Spanish default risk climbed to a record as Greece struggled to form a government after voters swung behind anti-bailout parties.
France elected its first Socialist premier since 1981 in the latest ballot-box rejection of the budget cuts governments had believed were the best cure for their debt troubles.
"Another flare-up of the crisis is likely," said poll respondent Alessandro Mercuri, an interest-rate strategist at Lloyds Banking in London. "The key variable for Europe is domestic politics."
About €386 billion ($635.4 billion) in aid commitments for Greece, Ireland and Portugal, the establishing of a larger rescue fund as well as €214 billion in bond purchases, and more than €1 trillion in cheap bank loans from the European Central Bank, have all failed to placate investors.
The number of poll participants who predicted a smaller eurozone within a year ballooned to 57 per cent from 11 per cent in January 2011. The 80 per cent saying that evidence Europe is stabilising is temporary, and that the market will be roiled again, also marks a jump from about two-thirds who held that position at the start of this year.
The 55 per cent who said backsliding by Europe posed a high risk to the world economy was more than double the number who said the same of a hard landing by China's economy or gridlock among United States politicians.
Even policy makers have begun to quiz whether Greece can stay in the euro, reviving the once taboo debate on whether the single currency is for life and on establishing a likely new round of elections as a referendum on membership.
"If Greece decides not to stay in the eurozone, we cannot force Greece," German Finance Minister Wolfgang Schaeuble said.
With recession beckoning, 84 per cent said the eurozone economy was worsening. The same number said they expected social unrest including riots, a worry that has progressively increased from 56 per cent in September.
Mirroring the irritation of voters, only a third of those questioned backed budget cuts as the most effective medicine for weak economies; 53 per cent advocated fiscal stimulus.
Greece, where stocks this week fell to their lowest level in about two decades, remains the focal point of the crisis.
Ninety-four per cent of poll respondents said it would default on its debt, the most since the survey began. The country has already restructured what it owes private bondholders.
Economists at Citigroup were among those to say this week the fragmented election result that left no party with a mandate had increased the chance of Greece quitting the single currency.
In a sign of contagion, 47 per cent said Spain was likely to default, the most since the survey started measuring this in June 2010 and almost double from four months ago, as investors ask if Prime Minister Mariano Rajoy can tackle both climbing debt and the region's highest jobless rate.
Sixty-three per cent bet Portugal would fail to pay its bills, although only about a quarter anticipated the same fate for Italy and Ireland. Just one per cent said Germany would go bankrupt.
While 90 per cent expected France to pay its way, Hollande's victory was greeted with disappointment as 71 per cent said it made them less willing to buy French bonds.
* 57 per cent of respondents expect at least one country to leave the euro this year.
* 55 per cent say Europe's woes present a big threat to the world economy.
* 47 per cent expect Spain to default on its debts.
Source: Bloomberg Global Poll
- BloombergBy Simon Kennedy