By Malena Castaldi
MONTEVIDEO (Reuters) - Uruguayans voted on Sunday in a presidential election that has the leftist ruling coalition battling to hold onto power for a third term and fend off a young center-right contender who promises to undo its pioneering marijuana law.
The Broad Front coalition has delivered a decade of strong economic growth and outgoing President Jose Mujica's social reforms, including the legalization of the production and sale of marijuana, have drawn global attention.
Uruguay's constitution does not allow two consecutive terms so Mujica, a 79-year-old former guerrilla who spurned the presidential palace to continue living in his ramshackle home, hopes to hand power to Tabare Vazquez, his predecessor and ally.
Vazquez faces stiff competition from Luis Lacalle Pou, 41, who has climbed steadily in polls since his unexpected victory in his National Party's primaries.
Opinion polls have put Vazquez on 43-46 percent compared with 31-33 percent for his younger rival. That would leave Vazquez short of the majority he needs for a first round victory and means a tight runoff in November is widely expected.
Vazquez brought the Broad Front to power in 2005 and his blend of pro-market economic policies and social welfare measures which slashed poverty rates won broad support. Mujica continued the model, which remains popular among many voters.
"These elections are close but I have hope," said 44-year-old Broad Front supporter Constanza Garcia, queuing with her mother to cast their ballots at a polling station in a church in the laid-back coastal capital of Montevideo.
"Uruguay is much better off now than ten years ago. We have grown, continued to grow and poverty has fallen."
The election was proceeding smoothly across the small South American country of 3.4 million. Voting is mandatory and people lined up early at polling stations, many sipping a local tea called "mate" from gourds through metal straws.
FRESH FACE
Lacalle Pou has tapped into a simmering discontent felt by some Uruguayans toward high taxes and the Broad Front's social reforms that also include the legalization of abortion and gay marriage.
Some young voters have been wooed by the surfing enthusiast's hip campaign style and easy-going demeanor and say Lacalle Pou is more in touch with them than the socialist old-guard. Vazquez is 74-years-old and Lacalle Pou's backers say the lawyer brings a fresh face to Uruguayan politics.
"He is young and I think he understands more the situation we are in today," said David Pintos, 38, who cast his ballot for Lacalle Pou in the city of Canelones.
The National Party candidate told Reuters last week he would try to repeal the state-regulated production and sale of marijuana if he won. A majority of Uruguayans oppose it.
While financial markets believe the Broad Front's economic policies are sound, some analysts say Lacalle Pou is more likely to rein in an above-target fiscal deficit and an inflation rate almost in double digits.
Uruguay's $55 billion economy has grown an average 5.7 percent annually since 2005. The government forecasts lower growth of 3 percent this year, although that is still better than in neighboring giants Argentina and Brazil.
The number of Uruguayans living in poverty has fallen sharply to 11.5 percent from more than a third in 2006.
Polling stations close at 7.30 p.m. (2130 GMT). Exit polls will be released at 8.30 p.m. and partial results are expected by 10 p.m.
Voters also elect lawmakers on Sunday. Neither the Broad Front nor the National Party are likely to win a majority in Congress, meaning the next president will face a tougher time than Mujica in passing laws.
(Additional reporting by Esteban Farat; Writing by Sarah Marsh; Editing by Catherine Evans and Kieran Murray)