Peru markets rally as runoff vote dominated by conservatives

LIMA, Peru (AP) - Investors are celebrating the apparent elimination of a leftist candidate in Peru's presidential election as the country gears up for a tight June runoff between the daughter of jailed former President Alberto Fujimori and a conservative economist beloved by Wall Street.

With nearly 90 percent of polling stations counted Monday, Keiko Fujimori had 39.5 percent of the vote, while former World Bank economist Pedro Kuczynski held 21.6 percent. Leftist congresswoman Veronika Mendoza, who had made a late surge in pre-election polls, was in third at 18.5 percent.

The results heartened investors who had dumped shares in the run-up to Sunday's election, fearing Mendoza's rise. The Lima stock exchange surged more than 12 percent Monday and the country's currency also rallied. Two quick counts, a reliable gauge of results in past elections, also showed Kuczynski holding on firmly to the No. 2 spot.

Fujimori has been the runaway favorite for months and looked poised to outdo even the most optimistic first-round scenarios in polls published before the vote.

But she faces an uphill battle in the second round because her father remains a deeply polarizing figure among Peruvians. A poll taken in late March gave Kucyznki a slight lead in an eventual head-to-head contest between the two.

Alberto Fujimori is remembered fondly by many, especially in the long-neglected countryside, for defeating Maoist-inspired Shining Path rebels and taming hyperinflation. But he is detested by large segments of the urban middle class for human rights abuses and his order for the military to shut down Congress.

Almost half of Peruvians recently surveyed said they would never vote for anyone associated with the former leader. Thousands took to the streets a week ago to warn that Keiko Fujimori's election could bring back authoritarian rule.

But picking up the anti-Fujimori votes won't be automatic, either. Just this month, Kuczynski told US television network Univision that if elected, he would sign a law allowing Alberto Fujimori to go home to finish a 25-year sentence for corruption and authorizing death squads during his 1990-2000 presidency.

Furthermore, he lacks the well-oiled ground game of Fujimori's Popular Force party, which won the largest number of seats in Congress. Kucyznki won in just one of Peru's 24 electoral districts, according to a quick count by local pollster Ipsos.

With an elite pedigree, heavily accented Spanish from more than a decade living abroad - and until recently a U.S. passport - he'll also face a hard time appealing to regular Peruvians in the same way Keiko Fujimori adroitly plays up her Japanese ancestry to connect with Peru's poor masses.

"Kuczynski is seen as representative of cosmopolitan Lima elite, while Keiko is seen as more representative of non-white and provincial Peruvians," said Steve Levitsky, a Harvard University political scientist who has spent two decades studying Peru.

But such political differences are unlikely to affect policy. Kuczynski's emergence as Fujimori's rival will ensure Peru continues along a free-market path after Mendoza's rise in the polls spooked investors. The outcome represents another setback for South America's left, which after sweeping into power across much of the region during the past decade's commodities boom has suffered a string of electoral losses in Argentina, Bolivia and Venezuela.

After finishing a strong third in the 2011 election, Kuczynski threw his support behind Keiko Fujimori in that year's runoff. He later said he regretted that decision but considered it necessary in trying to prevent the election of leftist Ollanta Humala, who held close ties to socialist Venezuela and had led an army rebellion in his youth. Once in office, however, Humala kept up a pro-business policy framework. The constitution barred him from seeking a second consecutive term.

Sunday's elections were marred by the worst guerrilla attack in Humala's presidency. On Saturday, Shining Path rebels killed eight soldiers and two civilians as they were traveling in a caravan to a remote village to provide security during the vote.

The electoral contest provided notable defeats for traditional politicians. Two former presidents, Alejandro Toledo and Alan Garcia, finished near the bottom of the 10-candidate field, while the congressional slate for Garcia's almost century-old APRA party barely got by the minimum 5 percent threshold to hold onto its legal standing.

Adding bitterness to the race, two candidates, including Fujimori's strongest rival, were barred from the race by Peru's electoral tribunal for campaign violations or technicalities, decisions questioned by the Organization of American States.

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Associated Press writers Rodrigo Abd in Peru's Ayacucho region and Joshua Goodman in Bogota, Colombia, contributed to this report.

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Franklin Briceno on Twitter at https://twitter.com/franklinbriceno. His work can be found at: http://bigstory.ap.org/author/franklin-briceno .