By Rosalba O'Brien
BUENOS AIRES (Reuters) - Cristina Fernandez began a second term as Argentine president on Saturday as signs of strain in a long economic boom force her to tweak the offbeat, high-growth policies that pleased voters but spook investors.
Fernandez won a landslide re-election in October on the back of sizzling economic growth and a wave of sympathy following the death in 2010 of her husband and predecessor as president, Nestor Kirchner.
She has vowed to "deepen the model" he started in 2003.
Still dressed in mourning black, an emotional Fernandez addressed cheering supporters throwing tickertape from the balconies of the Congress building to mark her inauguration.
"Our national project will continue until not one poor person remains," Fernandez said in her speech.
But double-digit inflation, capital flight and tight finances are raising concerns about the sustainability of Fernandez's big-spending policies as a worsening global outlook weighs on grain prices and reduces demand from neighbouring Brazil.
Factory output growth was significantly slower in October, a clear sign that Latin America's third-biggest economy is cooling down.
Fernandez's first job will be to usher the 2012 budget through before the end of the year. With a majority in Congress, that should be a foregone conclusion.
An intense timetable in December also includes discussion of a bill to limit sales on land to foreigners and an amendment to tighten the money laundering law.
Fernandez, 58, is a centre-left member of Argentina's dominant Peronist party and rejects orthodox belt-tightening measures, saying they stifle growth.
FIGHTING CAPITAL FLIGHT
She has already made several adjustments.
Days after she was re-elected with 54 percent of the vote, Fernandez ordered energy and mining firms to cash in export revenues on the local foreign exchange market and sent in tax officials to approve dollar purchases on a case-by-case basis.
Both measures were designed to counter surging capital flight and bolster the central bank's foreign currency reserves, which Fernandez has earmarked for debt repayments next year.
She also has started dismantling multibillion-dollar state subsidies on water, natural gas and utility bills, an unresolved legacy of a devastating 2001/02 economic crisis that is an increasing burden on public finances.
Deeper cuts in public spending -- such as further subsidy reductions or caps on wage demands -- likely will lead to struggles with the powerful trade union movement that provides the key support for Peronist politicians like Fernandez.
About 5,000 supporters, mostly young people from trade union groups, waving azure and white Argentine flags and blowing on trumpets, clustered in the square outside the Congress building where Fernandez was sworn in.
Her choice of market-friendly Finance Secretary Hernan Lorenzino as economy minister was well-received by Wall Street, where analysts said it could point to intensified efforts to clear up lingering fallout from the 2002 debt default and return to global markets.
"I don't see any significant changes," said political analyst Federico Thomsen. "What's happened so far has been reassuring for those who thought something scary would happen in the second term."
NEW VICE PRESIDENT
During her stormy first four-year term, Fernandez nationalized private pensions, fought with farmers over export taxes and ignored international arbitration awards to private firms hurt during a massive debt default in 2002, which left Argentina virtually frozen out of global credit markets.
The guest list for Saturday's inauguration ceremony included regional leaders such as Brazilian President Dilma Rousseff. Venezuelan President Hugo Chavez, who had been due to make his first official trip abroad since cancer treatment, cancelled at the last minute.
Fernandez's outgoing vice president, Julio Cobos, who refused to step down despite an acrimonious falling out with her, also was present. Cobos is seen by Fernandez loyalists as a traitor and is being replaced in her second term by her current economy minister, Amado Boudou.
Controversial price watchdog, Guillermo Moreno, who is known for arm-twisting company executives into lowering prices and increasing exports, is likely to have an expanded role, monitoring trade and currency flows.
(Editing by Bill Trott)
