Voters in Hungary are going to the polls Sunday in a second round of Parliamentary elections which have been overshadowed by concerns about nationalism and far right extremism. Opinion polls suggest the Socialist-Liberal opposition, which won the first round, could oust the centre right alliance of Hungarian Prime Minister Viktor Orban in what analysts describe as the toughest election campaign since the collapse of Communism.

A sea of tricolor red, white and green flags flapped above a huge crowd during one campaign rally, as Hungarians, some in traditional military outfits, burned candles and sang nationalistic songs.

Last week's rally, estimated at 500,000, was made up mainly of government supporters from around the country who marched to Kossuth Square in front of the ghotic Parliament building in Budapest.

Surrounded by famous sport figures and popstars, Hungary's youthful 38 year old Prime Minister Viktor Orban, urged the demonstrators not to betray Hungary by voting for the Socialists and what he calls "big capital."

The meeting was also attended by members of the far right Hungarian Justice and Life Party, known for its perceived anti-Semitic and anti- foreigners statements. It has pledged to support Mr. Orban's Federation of Young Democrats Hungarian Civic Party, known as Fidesz, and its smaller partner, the Hungarian Democratic Forum.

Analysts say the ruling party's courting of the far right and its nationalist rhetoric have set off alarm bells among Hungary's European neighbors and underscored the deep divisions within the country.

Meanwhile, the Hungarian Socialist Party, which has pledged to unite the country, won the most seats in the first round of voting on April 7, and is hoping to form a new Government in cooperation with the much smaller Alliance of Free Democrats.

Opinion polls have predicted a narrow victory for the opposition, a prospect that has apparently been welcomed by investors. Share prices rose on the local stock market following the first round of voting.

Whoever, wins control of the government is expected to support Hungary's European Union membership, which is expected in 2004.

However, Western officials say the outcome of the elections may well determine the future image of the EU, where a debate has raged over whether the organization should become a confederation of independent states or a kind of United States of Europe.

Analysts say the answer on this question is expected to come from mainly former Communist and current candidate countries such as Hungary. While Mr. Orban seems to support independence of a proud Hungary within an EU framework, his main rival, the Socialist Party candidate to head the government, Peter Medgyessy, believes in closer cooperation.

By Sunday evening, when the initial official results are expected, it will be known which direction the voters of Hungary want their country to go.