Felipe Calderón, the business-friendly candidate of the ruling National Action Party (PAN) on Monday emerged as the most likely winner of one of the closest elections in Mexico’s history.

According to preliminary figures, Mr Calderón, a conservative 43-year-old Harvard-trained economist, had an advantage of about 400,000 votes, or roughly 0.8 per cent of the total number cast.

He led Andrés Manuel López Obrador, the charismatic leftwing leader of the country’s Democratic Party (PRD), who was on 35.4 per cent, with more than 98 per cent of the votes counted.

Earlier, both candidates had claimed victory on the basis of exit polls and their own figures – even though the Federal Electoral Institute (IFE), Mexico’s electoral authority had insisted the result was too close to call and would require a recount.

The precipitate reaction had initially led to fears of possible political conflict and social protest. Thousands of López Obrador supporters gathered in Mexico’s central plaza chanted aggressively and let off fireworks in anticipation of victory.

Markets on Monday welcomed Mr Calderón’s slim lead, and Mexico stock market index was up about 5 per cent in mid-morning trading. The peso, Mexico’s local currency, also showed significant gains against the dollar, recording its biggest one-day rise in six years.

Damian Fraser, head of Latin American research at UBS Investment in Mexico City, said: “The reaction shows the market is looking for continuity and a continuation of orthodox fiscal and monetary policy.”

Indeed, Mr Calderón based much of his campaign platform on promises to continue the economic approach adopted by the administration of Vicente Fox, the outgoing president and a member of Mr Calderón’s centre-right party.

Since Mr Fox came to power in December 2000, interest rates and inflation have fallen to all-time lows, and the country has enjoyed the benefits of a stable economy in spite of disappointing rates of growth.

Late Sunday, Luis Carlos Ugalde, head of IFE, said that a recount to decide a winner would only begin Wednesday morning. He said electoral officials not stop until they had a final result but he stopped short of saying when that would be.

In the meantime, speculation mounted on Monday that Mr López Obrador, a former union leader, could dispute the results if the trend in favour of Mr Calderón were confirmed. “Any candidate has the right to question and that is what we are going to do,” he told a local radio station.

Mr López Obrador, a former mayor of Mexico City, has vowed to ramp up social spending and to represent the millions of poor Mexicans who feel they have not benefited from Mexico’s new-found macroeconomic stability.

Campaigning around the slogan “The poor must come first”, Mr López Obrador has promised pensions for all elderly Mexicans, hand-outs for the handicapped and single mothers. He has also promised to defend Mexico’s nationalised companies.

If Mr Calderón’s slim lead is confirmed later this week it would represent a remarkable turn-around in a race that has been dominated by the leftwing candidate.

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