Primary win boosts chances of Argentina's Fernandez

BUENOS AIRES (Reuters) - Centre-left Argentine President Cristina Fernandez looks set to win a second term in October and deepen her interventionist policies after thrashing rivals in a primary election, results showed on Monday.

With more than 93 percent of polling stations counted, Fernandez had just over 50 percent of the votes -- 38 points ahead of the closest contender, centrist opposition congressman Ricardo Alfonsin, the government election authority said.

Sunday's primary was effectively a nationwide opinion poll because parties had already chosen their candidates and voters could cast ballots for any party's candidate.

The results showed Fernandez has no real competitor in the October 23 election and is on track for a first round win.

But she faces major challenges, including taming inflation estimated at over 25 percent without hurting growth and cutting spending in the major grains producer, and finding a way to repay debt without draining central bank reserves.

"I voted for Cristina because I see my children's progress. They all have jobs, homes, cars. We used to travel by donkey," said Aida Peralta, 81, as she celebrated to the sound of drumming outside the president's campaign headquarters.

Cheering supporters waved flags and images of her late husband and presidential predecessor, Nestor Kirchner. Some held aloft images of Argentine-born revolutionary icon Ernesto "Che" Guevara.

Financial markets have already priced in a second four-year term for Fernandez but some investors hoped a strong opposition contender would emerge and spark a bond and stock rally.

Her two main opponents, Alfonsin and former President Eduardo Duhalde, a dissident from her own Peronist party, fared worse than expected, polling only around 12 percent each. The law prohibits them from forming an alliance.

Fernandez, 58, has rankled Wall Street by imposing price controls, raiding central bank reserves and publishing inflation data far below private estimates.

She has also enraged farmers and grain exporters with corn and wheat export curbs and policies that strengthen the hand of the state in Latin America's third-largest economy.

FARMING HEARTLAND BACKS FERNANDEZ

Despite this, Fernandez won strong support in urban and rural areas -- including farming centres -- and has a wide lead in opinion polls. Turnout was high at nearly 78 percent.

Many Argentines credit Kirchner and Fernandez with reviving the economy after a crippling 2001/02 financial crisis, when Argentina declared a record sovereign debt default that made it a market pariah.

"I call on everyone to think about the big picture, to be united. The world is in difficulty but if we manage to get over our differences ... we can learn to make fewer mistakes," Fernandez told supporters, extending an olive branch to her rivals.

She also paid tribute to Kirchner, who died last year, and has vowed to push on with and deepen his policies that foster import substitution and pro-poor subsidies.

Argentina's economy is expected to grow 8 percent this year as high grains prices and strong demand in neighbouring Brazil boost revenues despite turmoil in the United States and Europe.

Fernandez needs to win 45 percent of the vote in October to win outright and can avoid a run-off with 40 percent plus a 10-point lead over the runner-up.

"With around 50 percent of the vote, she is on the way to winning in the first round," said Mariel Fornoni, director of political consultancy Management & Fit.

"What's more, the opposition scenario is very complex. It looks unlikely an opposition leader can rally the anti-Kirchner vote behind them."

(Additional reporting by Hugh Bronstein, Karina Grazina, Jorge Otaola, Nicolas Misculin, Guido Nejamkis, Juliana Castilla, Luis Andres Henao, Maximilian Heath; Editing by John O'Callaghan)