Venezuela army assures calm after Chavez surgery

CARACAS (Reuters) - Venezuela's military sought to quash any talk of unrest or infighting on Friday as socialist leader Hugo Chavez's revelation of cancer surgery shakes the South American OPEC nation he has dominated since 1999.

Army chief General Henry Rangel Silva said the military would guarantee constitutional order during Chavez's absence for treatment in Cuba. The president, he said, would be home "soon" and was still in charge of Venezuela.

"We have seen our comandante thinner than usual but still standing. The truth is he is getting better, he's fine," Rangel told state television. "The country is calm."

The usually vivacious Chavez, 56, confirmed in a stern speech on Thursday night he had surgery in Cuba to remove a cancerous tumour and was receiving more treatment.

Leaving many questions unanswered, Chavez did not say when he would be back from Cuba, where he disappeared from public view after surgery on June 10. Nor did he specify the treatment he is receiving, leading to speculation the malignant cells may have spread and he may be needing chemotherapy.

"I have continued evolving satisfactorily while I receive complementary treatments to combat the diverse types of cells found and thus stay on track for full recovery," Chavez said in his speech.

He did not name a temporary substitute.

The region's biggest critic of Washington, Chavez will miss events marking Venezuela's 200th anniversary of independence. He cancelled a regional summit timed for the momentous July 5 date.

Markets have generally reacted positively to news of Chavez's health problems, on the presumption they improve the chances of a more business-friendly government.

That sentiment continued on Friday with Venezuela's benchmark 2027 bond up 2.0 points.

"Political vacuums are rarely to be encouraged, but this one could lead to a slowdown in public spending and could raise the likelihood of an opposition victory in the next elections, and thus a less confrontational governing style," said Richard Segal, an emerging markets analyst at Jefferies in London.

"WE WILL CONQUER"

Chavez allies vowed they will continue his leftist drive, which has included nationalization of vast parts of the economy, a broad diplomatic challenge to Washington's dominance of the region and a steady takeover of an oil industry that is a key supplier to the United States.

"We will live and we will conquer. Until my return!" Chavez said in Thursday night's emotion-charged address from Havana.

In poor Caracas shantytowns, where Chavez is still widely loved for using oil revenues to build new clinics and schools, supporters saluted him overnight with fireworks.

"He's alive! He's alive!" one group shouted.

Opposition leaders, seeking to rally around a unity candidate to be picked in February for the 2012 presidential vote, may take the news as a sign Chavez is weakened and less likely to win.

"It is impossible to deduce if he will or will not be in a physical state and the right mood to go into the 2012 campaign," said local analyst Luis-Vicente Leon.

The opposition was trying hard to avoid appearing gleeful at Chavez's ill health, though some detractors posted vitriolic messages on Twitter and other sites.

Known for eight-hour speeches and frequent camera appearances, Chavez left Venezuela in near silence and its government functioning at half-steam for almost three weeks after a June 10 operation to remove a pelvic abscess.

LATIN AMERICAN SOLIDARITY

His continued convalescence raises questions about how he can still govern from Cuba, and whether or not he can control his sometimes unruly coalition.

"The president looks fallible for the first time and it may be only a matter of time before the cracks begin to appear, potentially between a civilian and a more military wing (in government)," the British-based LatinNews newsletter said.

Anticipating talk of a power vacuum or succession fight, Chavez's ministers said the government would remain united. In a joint appearance immediately after the president's address, they pledged commitment to his reforms even in his absence.

Supporters seemed shocked and at times in denial at the news of his cancer, which government supporters had until Thursday passed off as idle rumour spread by the opposition.

Chavez's combative rhetoric, Caribbean folksy charm and social programs from rural villages to shantytowns have allowed him to win almost all the elections his coalition has confronted, undermining critics who call him a dictator.

But he has alienated many with his authoritarian streak, reflected in his stranglehold on government and belligerent treatment of political opponents, and his aggressive nationalization of a wide range of industries.

His popularity has been weakened in recent years as he has struggled to keep up with bread-and-butter government tasks such as keeping electricity flowing, putting criminals in jail and providing housing for the poor.

Latin American leaders sent messages of solidarity.

Paraguayan President Fernando Lugo, treated for cancer last year, wished him "faith" and "strength." An erstwhile foe who has patched up his relationship with Chavez, Colombia's President Juan Manuel Santos, wished him a "speedy recovery."

(Additional reporting by Mario Naranjo, Daniel Wallis, Deisy Buitrago, Diego Ore, Eyanir Chinea and Girish Gupta in Caracas, Carolyn Cohn in London; Editing by John O'Callaghan)