As World Awaits Venezuela Presidential Results, Tanks Enter Caracas

>

* Long-serving president faces youthful state governor

* Capriles taps into discontent over crime, corruption

* From Havana to Tehran, vote has implications abroad

By Daniel Wallis and Todd Benson

CARACAS, Oct 7 (Reuters) - Venezuela's presidential election looked headed for a close finish on Sunday with Hugo Chavez facing an unprecedented challenge to his socialist rule from a young rival tapping into discontent over crime and cronyism.

An energetic campaign by centrist state governor Henrique Capriles, 40, has united the opposition and turned him into its best chance in 14 years to unseat the popular president and take the reins of South America's leading oil exporter.

Chavez has used record oil revenue to support ideological allies around the world while preaching a fiercely anti-Washington line, so the election is being watched eagerly from the United States to Belarus and Iran.

Polling stations had been due to close at 6 p.m. local time (2230 GMT), but election officials said those with lines of voters outside would be kept open until everyone had cast their ballot.

Sources on both sides predicted a narrow victory based on their own monitoring, while local analysts said it looked too close to call. Several unofficial exit polls gave divergent results, but all showed a tight result.

Thousands of Chavez supporters lined the streets to welcome him as he arrived at the school in a Caracas hillside slum where he cast his vote. Some handed him flowers, and one elderly woman serenaded the president with a folk song.

"Today is a day of joy, a day of democracy, a day for the fatherland," the president said.

In a show of vigor, Chavez - who has undergone two operations for cancer since June 2011 - shadow-boxed with U.S. actor Danny Glover, who was on hand with other celebrity fans of the Venezuelan leader to watch him vote.

In poor neighborhoods where Chavez draws his most fervent following, supporters had blown bugles and trumpets in a predawn wake-up call.

"local time (2230 GMT), but election officials said those with lines of voters outside would be kept open until everyone had cast their ballot.Sources on both sides predicted a narrow victory based on their own monitoring, while local analysts said it looked too close to call"As dusk fell, hundreds gathered outside the Miraflores presidential palace, partying in anticipation of their man's victory and a speech later from its balcony.

Despite his remarkable comeback from cancer, Chavez, 58, could not match the energy of his previous campaigns - or the pace set by his 40-year-old basketball-loving opponent.

CAPRILES RIDES ANTI-CHAVEZ DISCONTENT

Capriles, a boyish looking lawyer-turned-politician who has never lost an election, has rallied support by focusing on the day-to-day problems that worry voters most, such as high crime rates, power blackouts and widespread corruption.

Sporting what he called his "lucky shoes," the superstitious Capriles struck a conciliatory tone after voting. "Whatever the people decide today is sacred," he said to applause from supporters. "To know how to win, you have to know how to lose."

In wealthy enclaves of the capital, his fans geared up for the vote by banging pots and pans in an overnight protest.

"Today I'm doing my bit to build a new Venezuela," said Francesca Pipoli, 26, walking to vote with two friends in a rich district of Caracas. "Capriles for president!" they sang.

In the United States, Venezuelan expats traveled to New Orleans to vote - mostly for Capriles - after Chavez ordered the country's consulate in Miami closed earlier this year.

During the campaign, most well-known pollsters had put the president in front. But two put Capriles just ahead, and his numbers had been creeping up in others.

Some said voter turnout could reach 75 percent, and there were fears there could be violence if the result is contested.

There are no formal international observers, though a delegation from the UNASUR group of South American nations, led by an Argentine politician, is "accompanying" the vote.

Local groups were also monitoring the election and both sides say they trust the electronic, fingerprint voting system.

The opposition deployed witnesses to all of the 13,810 polling centers, from tiny Amazon villages to tough Caracas slums.

In a politically polarized country where firearms are common and the murder rate is one of the world's highest, tensions have risen in recent weeks. Three Capriles activists were shot and killed by alleged Chavez loyalists on Sept. 29.

After voting, Chavez pledged to respect the election results and called on the opposition to do the same. Some opposition activists fear he could refuse to step down if he loses.

A Capriles victory would unseat the most vocal critic of the United States in Latin America, and could lead to new deals for oil companies in an OPEC nation that pumps about 3 million barrels a day and boasts the world's biggest crude reserves.

CHAVEZ POPULAR AMONG POOR

Capriles wants to copy Brazil's model of respect for private enterprise with strong social welfare programs if he is elected - but he would face big challenges from day one. For a start, he would not take office until January 2013, and some worry the Chavez camp might not cooperate with a Capriles transition team.

He would also have to develop a plan to tackle high inflation, price distortions and an over-valued currency, while surely butting heads with the National Assembly, judiciary and state oil company PDVSA - all dominated by "Chavistas."

Another big task would be to figure out the real level of state finances.

"Several unofficial exit polls gave divergent results, but all showed a tight result.Thousands of Chavez supporters lined the streets to welcome him as he arrived at the school in a Caracas hillside slum where he cast his vote"Last month, a Reuters investigation found that half of public investment went into a secretive off-budget fund that is controlled by Chavez and has no oversight by Congress.

The president has denounced his foes as traitors and told voters they plan to cancel his signature social "missions," which range from subsidized food stores to programs that build houses and pay cash stipends to poor women with children.

The message resonates with his followers.

"If Chavez loses, it's all over. They're going to take away our missions and our hope," said Elida Perez, a 50-year-old housewife in Caracas.

If Chavez wins, he would likely consolidate state control over the economy and continue backing leftist governments across Latin America, such as communist Cuba, which receives Venezuelan oil at a discount, as well as ideological allies further afield.

Any recurrence of Chavez's cancer would be a big blow to his plans, however, and could give the opposition another chance.

Investors who have made Venezuela's bonds some of the most widely traded emerging market debt are on tenterhooks.

"There is a perception that a tight electoral outcome may trigger social and political unrest and market volatility," Goldman Sachs said in a research note.

Results were due any time starting late on Sunday evening.

The electoral authority says it will only announce the results once there is an "irreversible trend" and parties are barred from declaring victory in advance of that announcement.

Stocks Bonds News Bonds Markets Energy Related Quotes and News Company Price Related News