Humala leads Peru vote, run-off wide open

LIMA (Reuters) - Left-wing nationalist Ollanta Humala led the first round of Peru's presidential election on Sunday, with two pro-business rivals vying for second place and the right to challenge him in a June 5 run-off.

With 43 percent of ballots tallied, officials said Humala had 27 percent of the votes, followed by former Wall Street banker Pedro Pablo Kuczynski at 23.6 percent and rightist lawmaker Keiko Fujimori at 21.8 percent.

Three earlier unofficial samplings of ballots, however, showed Humala with a wider lead over his nearest challenger and Fujimori advancing to the run-off with a lead of 2 to 4 percentage points over Kuczynski.

Despite a decade-long economic boom, a third of Peruvians live in poverty and many rallied behind Humala, a former army officer who has positioned himself as a man of the people facing rivals backed by big business.

"Peru has lots of natural resources, forests and mines, but the wealth doesn't reach the people. We are sick of traditional politicians," bartender Miguel Rojas said at an Humala rally.

Polls suggest both Fujimori and Kuczynski would have trouble defeating Humala in a second round vote and economic analysts said Sunday's results would hit Peruvian asset prices on Monday.

Fujimori, 35, favors free-market policies, but is shunned by many Peruvians because her father, former president Alberto Fujimori, is in prison for corruption and human rights crimes stemming from his crackdown on guerrillas in the 1990s.

Kuczynski, 72, a former prime minister who is known as "El Gringo" because of his European roots, would have trouble gaining traction outside of Lima, where he is strongly backed by wealthy voters.

Humala, a former army officer who led a short-lived military revolt in 2000, has softened his anti-capitalist tone since narrowly losing the 2006 elections.

"We are willing to make many concessions to unite Peru, we are going to talk with all political forces," Humala told cheering supporters. "Social problems must be resolved through dialogue."

Humala, 48, has surged in the race by recasting himself as a moderate in the vein of former Brazilian President Luiz Inacio Lula da Silva and distancing himself from his former political mentor, Venezuelan President Hugo Chavez.

His rivals have sought to hurt his chances by saying he would step up state control over the economy, rolling back reforms and jeopardizing some $40 billion (24 billion pounds) of foreign investment lined up for the next decade in mining and energy exploration.

Such warnings have spooked better-off Peruvians, who enjoy relative wealth and stability after years of hyperinflation and guerrilla wars during the 1980s and 1990s.

Humala has taken to wearing ties, carrying rosary beads to show he is a devout Roman Catholic and promising to be fiscally prudent while respecting the independence of the central bank and honoring the country's many free-trade pacts.

Those tactics have persuaded some on Wall Street and in Peru's vast mining sector that he has matured and is no longer like his brother and father, two well-known Peruvian radicals.

Moody's ratings agency said Peru's investment-grade credit rating would not be threatened by an eventual Humala victory.

Still, Peru's sol currency and the country's main stock index have dipped over the past two weeks on worries Humala could raise mining taxes, hike state subsidies or tighten control of "strategic" sectors like electricity.

Market analysts said former president Alejandro Toledo, the early frontrunner in the race who was running fourth on Sunday, was seen as having the best chance of beating Humala.

"It's bad news for markets, it's not going to be positive performance tomorrow. I'm 97 percent sure it's going to be a very bad day for markets," said Alberto Bernal, head analyst at Bulltick Capital Markets in Miami.

(Additional reporting by Patricia Velez, Caroline Stauffer, Marco Aquino and Teresa Cespedes; Writing by Terry Wade and Helen Popper; Editing by Anthony Boadle and Paul Simao)