Santorum stuns in Iowa duel with Romney

DES MOINES, Iowa (Reuters) - Little-known contender Rick Santorum emerged with a surprising triumph in Iowa's first-in-the-nation Republican nominating contest on Tuesday but rival Mitt Romney solidified his frontrunner status in the battle to pick a challenger to President Barack Obama in November's election.

With more than 99 percent of the Iowa votes counted, Santorum, a conservative former Pennsylvania senator, held a lead of just four votes over Romney as the campaigns prepared for the next contest in New Hampshire in one week.

"Game on!" Santorum declared to cheering supporters as votes trickled in after the agonisingly close contest. "People have asked me how I've done this," he said. "I survived the challenges so far by the daily grace that comes from God."

Santorum and Romney, the former Massachusetts governor who has relentlessly attacked Obama for his "failed presidency" and touted his experience as a businessman, were tied at 25 percent. Ron Paul, a Texas congressman, was in third place with 21 percent of the vote.

After the bruising contest, at least one candidate, Texas Governor Rick Perry, indicated his presidential bid may be over.

"I've decided to return to Texas, assess the results of tonight's caucus, determine whether there is a path forward for myself in this race," Perry said after a disappointing fifth place finish.

With deep reserves of cash and a strong campaign infrastructure, Romney will emerge from Iowa in a much stronger position than his rivals even though he faces continued mistrust from conservatives.

A favourite of the party's business wing, Romney holds a commanding lead in New Hampshire and has the resources to compete in bigger states like Florida at the end of the month. Television networks reported that Senator John McCain, the party's 2008 nominee, will endorse him on Wednesday.

"This has been a great victory for him," Romney said of Santorum. "We also feel it's been a great victory for us."

Santorum vaulted from the back of the pack to emerge as the latest conservative favourite in a race that has been marked by volatility. Campaigning in all Iowa's 99 counties, he emphasized his home-schooled children and opposition to gay marriage in a bid to win the state's large bloc of Christian conservatives.

Santorum staked his campaign on a strong showing in Iowa but with little cash and a bare-bones campaign operation he could have difficulty competing in other states.

An afterthought in the race until now, Santorum also has avoided the scrutiny that has derailed other candidates. Though he touts his ability to sell conservative ideas to Democrats and independents, Pennsylvania voters threw him out of office by an 18-point margin in 2006.

Rivals have begun to comb through his legislative record to paint him as a free-spending budget-buster, and earlier in the day he accused Paul of launching automated telephone attacks questioning his opposition to abortion and support for gun rights.

Iowa is better known for narrowing the field than picking the eventual nominee, and although McCain was able to overcome a fourth-place finish in 2008 conventional wisdom holds that there are three tickets out of the state.

Paul's unorthodox views, including supporting a return to the gold standard and an end to a U.S. overseas military presence, have won him a passionate following among voters who feel deeply alienated from more mainstream candidates. But he will have an uphill climb translating that into wider support among Republicans.

"We have to emphasize protecting your personal rights and your economic rights are what the governments supposed to do, they're not supposed to run our lives or spend our money," he told supporters.

Most of the candidates have topped opinion polls at some point and many voters said they were undecided even as the caucuses got under way.

Voters gathered in schools, churches and other venues around on a cold evening in the midwestern state, listening to supporters tout the various candidates before casting their ballots. Democrats and independents were allowed to participate as long as they re-registered as Republicans at the site.

Outside groups associated with candidates, known as "Super PACs," took advantage of loosened campaign-finance rules to flood the Iowa airwaves with negative advertising.

Former House of Representatives Speaker Newt Gingrich saw his support dwindle under a barrage of attack advertisements, many from a Super PAC run by Romney allies. He looked likely to finish in fourth place.

Despite the negative onslaught, "everywhere we went people were positive," Gingrich told supporters. "They really wanted to get to the truth rather than the latest 30 second distortion."

Another candidate, U.S. Representative Michele Bachmann, fared worse. The lawmaker from neighbouring Minnesota has lost momentum since topping an informal tally in August. She finished in sixth place with 5 percent of the vote but vowed to press on.

Sparsely populated Iowa only yields 28 delegates of the 1,143 needed to lock up the Republican presidential nomination, and those delegates aren't actually awarded for months after Tuesday's caucuses.

The state, closely divided between Democrats and Republicans, is likely to play an outsize role in U.S. politics through to the November 6 election.

While Republican candidates have dominated the headlines, Obama's Democrats have quietly built a massive organization to round up voters in the fall.

Obama told Iowa supporters in a video chat on Tuesday evening that he would need the same energy and enthusiasm that helped him win the caucus four years ago, vaulting him into the lead for the Democratic nomination.

"It's going to be a big battle," he said.

(Additional reporting by John Whitesides, Steve Holland and Sam Youngman in Iowa and Emily Stephenson, Lily Kuo, Caren Bohan and Alexandra Alper in Washington; Writing by Andy Sullivan; Editing by David Storey)

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