Argentine ruling party candidate seeks first-round election victory

BUENOS AIRES (Reuters) - Argentines vote for a new president on Sunday with outgoing leader Cristina Fernandez's candidate the favourite to win despite deep divisions over her brand of leftist populism, which has driven up inflation and shackled the economy.

Polls show Daniel Scioli of the leftist Front for Victory ruling party with a clear lead over his rivals, although he cannot be sure of an outright win and may be forced into a runoff vote next month.

Fernandez will step down with approval ratings near 50 percent, yet her eight years in power have polarized the nation.

The fiery nationalist is adored by the poor and working class for generous welfare handouts and protectionist policies but reviled by others for suffocating the economy.

The outcome of the election will determine the speed and depth of reforms needed to kick-start growth, restore the central bank's near-empty liquid reserves, narrow a yawning fiscal deficit and tame high inflation.

Scioli, a moderate within the broad Peronist movement that dominates Argentine politics, plans to unravel some of Fernandez's policies but pledges only gradual change and says he will stick with her popular welfare programs.

"We are what's known, and people are not in the mood for experiments," Scioli said on Thursday, the last day of campaigning.

His rivals, centre-right Mauricio Macri and centrist Sergio Massa both promise to move faster to open up Latin America's No.3 economy.

To win outright on Sunday, Scioli needs 45 percent of votes, or 40 percent with a 10 percentage point lead over his closest challenger. Polls show him hovering near the 40 percent threshold and Macri approaching 30 percent.

The election marks the end of 12 years of "Kirchnerismo" covering the presidencies of Fernandez and her late husband and predecessor, Nestor Kirchner. They are credited by supporters with reviving growth, protecting Argentine industry and helping the poor after a massive economic crisis in 2001-02.

LOYALISTS

Scioli owes much of his support to Fernandez loyalists. Yet, a year ago the ruling party was mired in trouble. Argentina had defaulted again on its debt, economic growth was in a tailspin and hard currency was flying out the door in black market trade.

In January, the murky death of prosecutor Alberto Nisman who had levelled grave allegations against Fernandez shook the government. She bounced back after a court threw out the dead prosecutor's case and she spent heavily to reboot growth.

Wary of alienating Fernandez's supporters, Scioli warns against abrupt change. He rejects fiscal austerity and a shock devaluation and says monetary reform should be slow to avoid hurting the poor. Privately, his close advisors sell a more investor-friendly message

Macri and Massa both promise to start work quickly on dismantling trade and currency controls, and to improve the accuracy of government economic data that experts say is often fudged.

It's a message that resonates with many voters, in particular among the urban middle and upper classes.

"It's clear this country needs a change," said 54-year-old Luis Sereno on the eve of the election. "A change from high inflation and a change from Fernandez's confrontational style."

All three candidates have tip-toed around the subject of negotiations with U.S. creditors whose legal battle over unpaid debt tipped Argentina back into default last year. But each team says their candidate wants a deal that does not sell Argentina short.

Voters will also elect some regional governors, half of the lower house of Congress and a third of the Senate.

(Additional reporting by Jorge Otaola and Juliana Castilla; Editing by Kieran Murray)

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