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Pinera aims for centre in tight battle for Chile's top job

By Antonio De la Jara and Dave Sherwood

SANTIAGO (Reuters) - Conservative billionaire Sebastian Pinera said he would court centrists on Monday in a bid to regain ground in Chile's presidential election after a surprise surge by leftists in Sunday's first-round vote.

Pinera faces a tight Dec. 17 runoff against centre-left Alejandro Guillier and will also likely have to deal with opposition to his promised tax breaks in the next left-leaning Congress if he triumphs.

A former president who ran Chile between 2010 and 2014, Pinera placed first with more than 36 percent of the vote, but his two main left-leaning rivals made a stronger-than-expected showing, garnering a combined 43 percent between them.

And after Congressional elections that also took place on Sunday, left-of-centre lawmakers will outnumber Pinera's Chile Vamos voting bloc in Congress, complicating his plans to cut the corporate tax rate and slash red tape in the top copper exporter.

Markets that had priced in a new four-year term for Pinera sank on Monday. Chile's stock index <.IPSA> took its biggest daily dive in six years and the peso currency <CLP=> suffered its sharpest depreciation since 2013.

"It's going to be a tight and hard-fought election," Pinera told foreign media on Monday in capital Santiago.

To boost his chances of winning, Pinera said he would tap some of the more popular lawmakers-elect in his bloc to help guide his campaign.

"We're going to appeal to the centre, to the kind of people who want moderation," said Pinera. "We're going to listen with humility to what the majority of Chileans want."

On Monday night, the centre-left Christian Democratic party endorsed Guillier "without conditions." Its presidential candidate, Carolina Goic, who was the most moderate of those running to Pinera's left, garnered about 2 percent of the vote in Sunday's contest.

According to the vote tally, many Chileans want change.

A new leftist grouping, Frente Amplio, which has criticized Chile's model of free-market provision of services and promised to tax mining companies and the "super-rich", performed much better than expected.

The bloc's presidential candidate, Beatriz Sanchez, secured 20 percent of votes in the field of eight, double the support predicted by pollster CEP. The block won its first senate seat and around 20 seats in the lower house of Congress.

No single bloc will control Congress.

A Pinera victory in December was no longer a sure thing, said election forecaster and political scientist Kenneth Bunker.

"It's all up in the air right now," Bunker said. "We were just dumbfounded when the results started to come in."

In another bad sign for Pinera, Chileans went to polls in bigger numbers than expected on Sunday. Analysts say a low voter turnout favours Pinera because his supporters tend to be better at showing up to vote.

TRICKY TASK AHEAD

Chile, a country of 17 million people with a $250 billion (188.88 billion pounds) economy, has been one of Latin America's most business-friendly and stable nations since its transition to democracy in 1990.

Its economy slowed, however, to an average growth rate of 1.8 percent during outgoing President Michelle Bachelet's term, with lower copper prices dragging on government revenue.

Guillier has promised to deepen Bachelet's policies, from expanded access to free university education to protections for striking unions, without departing from Chile's free-market economic model.

He has a tricky task ahead to attract the support of Chile's wide-ranging left-of-centre voters, in part because he is seen by many as a continuation of Bachelet's unpopular government.

Having slammed Pinera as a "step backward" for Chile, Sanchez, a 46-year-old former radio journalist, could rally her supporters to vote for Guillier, but likely in exchange for policy concessions.

"If Mr Guillier wants us to vote for him, he's going to have to give in to Beatriz's proposals," Sanchez supporter and salesman Hector Mino said. He cited Sanchez' plan to wipe out student debt and overhaul the public-private pension system to ensure bigger payouts as possible offerings.

But a too-sharp left turn could push more centrists to Pinera.

As left-leaning blocs weighed possible alliances, far-right Jose Antonio Kast threw his weight behind Pinera. Kast won nearly 8 percent of votes and urged the Chileans who cast them to vote for Pinera in the runoff.

"We're not going to demand anything in return," said Kast, who defended deceased Chilean dictator Augusto Pinochet during the campaign.

(Reporting by Antonio de la Jara and Mitra Taj, Additional reporting by Dave Sherwood, Felipe Iturrieta and Reuters TV; Editing by Rosalba O'Brien and Cynthia Osterman)