* Poll shows ruling Labour could remain largest party
* Cameron says five more years of Labour would be disaster
* Cameron says waiting to cut budget deficit would be wrong
(Updates with Cameron speech)
By Keith Weir and Matt Falloon
BRIGHTON, England, Feb 28 (Reuters) - Britain"s rulingLabour could remain the largest party in parliament after anelection due in months, a poll showed on Sunday, confirming thatthe Conservatives" long-held advantage was evaporating.
Seeking to rally party activists, Conservative leader DavidCameron said that a fourth successive Labour election win wouldbe a "disaster" for Britain.
"It is an election we have to win because our country is acomplete mess and it is our patriotic duty to turn it around andgive it a better future," he said in a speech in the southernEnglish city of Brighton.
"Another five years of (Prime Minister) Gordon Brown wouldbe a disaster for our country,"
The Sunday Times/YouGov poll put support for theConservatives at 37 percent, while Labour was on 35 percent andthe Liberal Democrats were on 17 percent. [ID:nUKPOLLS10]
But under Britain"s first-past-the-post, constituencysystem, that share of the vote could translate into 317 seatsfor Labour in the 650-member parliament and give theConservatives only 263, the Sunday Times reported.
That would enable Brown to head a minority government,needing support from smaller parties to pass legislation.
The prospect of an inconclusive election is sending jittersthrough financial markets which want to see decisive action tocut a budget deficit of more than 12 percent of GDP.
DEFICIT BATTLE
Cameron said the economy was the key issue and dismissedBrown"s claims that swift spending cuts would kill off a fragilerecovery from the worst recession since World War Two.
"We say that if you don"t do anything, you will see interestrates go up, you will see mortgage rates go up and you will seeconfidence drained away from our economy and the country will goback into a deeper and darker recession," he said.
The Conservatives have pledged this weekend to cut taxes oncompany profits, a move likely to cost 3.5 billion pounds ($5.3billion) per year but which they said can be paid for byscrapping some business tax reliefs. [ID:nLDE61Q06M]
"Being seen to be the toughest on tackling the deficithasn"t helped recently so I suspect this latest message (companytax cuts) is designed to help the Tories" softer side," saidAlan Clarke, economist with BNP Paribas.
"I think they are trying to balance the message."
The Conservative lead was in double figures late last yearbut has been narrowing in recent surveys which pointincreasingly to a hung parliament.
The latest poll indicates that allegations in a book thatBrown intimidated staff have had no adverse impact on Labour"sratings. Brown has denied the claims.
Labour, expected to call an election on May 6, was delightedwith the latest poll.
"It"s part of a trend. It shows people more and morequestioning David Cameron and more and more suspicious andfearful of the Conservatives as we come up to the election,"Welsh Secretary Peter Hain told BBC TV.
"People are really fearful of this almost relish for deepand savage (spending) cuts." (Additional reporting by Adrian Croft and Kylie MacLellan;editing by Philippa Fletcher)
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