NICOSIA: Rightwing leader Nicos Anastasiades won Sunday's presidential election in Cyprus, securing a mandate to negotiate a crucial bailout for the EU state on the brink of bankruptcy.

The electoral commission said Anastasiades, leader of the right-wing Disy party, won 57.5 percent of the vote in a second round run-off against communist-backed Stavros Malas, who polled 42.5 percent.

Anastasiades had been given "a clear and strong mandate to battle for Cyprus," in upcoming negotiations with Brussels over the terms of an estimated 17-billion-euro ($23-billion) bailout package, Disy spokesman Tassos Mitsopoulos said.

The result sparked instant celebrations as a large flag-waving crowd gathered outside the winner's Nicosia headquarters and supporters honked car horns and set off firecrackers across the capital.

Malas said in his concession speech his party will be "severe critics of anything that diverts from the interest of the people or the country."

Anastasiades, 66, who takes over at the end of the month, favours a swift EU bailout agreement for the island and says he accepts the harsh measures required to secure it, while Malas campaigned on a pro-bailout but anti-austerity ticket.

Unemployment reached 14.7 percent in January, having more than doubled over the previous 18 months as recession crippled the construction and service industries.

The election was closely watched across the 17-member Eurozone, whose finance ministers had deferred a decision on the proposed bailout until negotiations take place with the new leader.

Nobel laureate Christopher Pissarides, a Greek Cypriot economist, told reporters he was ready to help the new leader. "We have a lot of work to do to revive the economy. Everything is possible."

Anastasiades took 45.46 percent of the vote in a first round on February 17 but was forced into a second round against second-placed Malas after falling short of the 50 percent required to secure an outright victory.

The vote came against a backdrop of grim economic news, with the European Commission predicting the Cyprus economy will shrink 3.5 percent in 2013 after a 2.3 percent contraction last year.

It said the economy would continue to shrink until 2016.

The election is seen as one of the most important since independence from Britain in 1960, and unlike previous polls on the normally affluent island it focused on the economy rather than reunification with the Turkish Cypriots.

With the election of Anastasiades, who has close ties with Germany's Chancellor Angela Merkel, "there are chances of a good climate and understanding between Nicosia and Brussels," said political analyst Christopheros Christophorou.

The international community will also expect the next Greek Cypriot leader to pick up the pieces of a deadlocked UN push for reconciling both sides of the island.

Cyprus has been divided since 1974 when Turkish troops invaded and seized its northern third in response to an Athens-inspired coup aimed at uniting the island with Greece.