Romania's Basescu set for knife-edge poll win

BUCHAREST (Reuters) - Romanian President Traian Basescu, an outspoken anti-graft campaigner, looked to have won re-election on Monday, narrowly defeating a leftist challenger for the job of leading the EU newcomer out of political and economic crisis.

With 95 percent of ballots from Sunday's vote counted, Basescu had 50.43 percent versus 49.57 for Social Democrat leader Mircea Geoana, the Central Election Bureau said. Geoana did not immediately concede defeat.

The vote was one of the most important for the Balkan state since it executed Stalinist dictator Nicolae Ceausescu 20 years ago, as the victor must name a new government that can restart talks on a stalled 20-billion-euro (18 billion pound) IMF rescue loan.

The knife-edge outcome sent the leu currency slightly lower against the euro, and analysts said it could extend a political deadlock that put the aid package on ice last month.

The vote represented a late comeback for Basescu, who trailed Geoana by eight percentage points in the last two polls before the vote, after the leftist forged a pact with the third largest party, the Liberals, to rule together if he won.

Analysts said the abrasive Basescu could struggle to form a government with other major parties with which he repeatedly clashed over anti-corruption measures during his five-year term.

"Theoretically, President Basescu cannot lose this election given the current figures," said Adrian Basaraba, head of the political science department at the University of Timisoara.

"It will be much harder for Basescu to form a government."

Exit polls on Sunday had shown Geoana in the lead. But Basescu appeared to win most of some 150,000 ballots cast by the more than 2 million Romanians living abroad, who backed him heavily in a November 22 first round that he won.

IMF DEAL

Last month, the International Monetary Fund suspended review of the aid deal propping up the EU's second poorest economy, after opposition parties toppled a Basescu-allied cabinet that has stayed in place as an interim administration.

The Fund has said it will hold back a 1.5 billion euro aid tranche -- originally planned for December -- until a new government and a cost-cutting budget are in place, raising concern among markets about Bucharest's finances.

The Romanian leu was down 0.3 percent from Friday's close at 7:41 a.m. British time, underperforming the Hungarian forint and the Polish zloty.

"In theory we should expect a negative