UPDATE 4-Cypriot conservative chief leads in vote, faces runoff

Reuters Middle East

* Anastasiades gets 45.3 pct share after most votes counted

* Runoff set to be held Feb. 24 against leftist rival Malas

* New president must negotiate deal with EU, IMF

NICOSIA, Feb 17 (Reuters) - Conservative leader Nicos

Anastasiades grabbed a commanding lead in Cyprus's presidential

election but failed to avoid a run-off next week, in a setback

to investor hopes for a swift deal to save the island nation

from bankruptcy.

A financial crash in Cyprus could reignite the euro zone

debt crisis and investors are keen to see Anastasiades, the

strongest advocate of an international rescue deal likely to

come with harsh conditions, clinch victory and secure a bailout.

The eastern Mediterranean nation's worst economic crisis in

four decades has eclipsed its almost four-decade-old partition

as the main issue in this year's election.

Anastasiades, 66, a lawyer who has led the Democratic Rally

party since 1997, led with 45.3 percent of the vote after 94

percent of the vote was counted, well ahead of leftist rival

Stavros Malas, who took an average of 27.1 percent of the vote.

Exit polls earlier suggested Anastasiades might be able to

secure just over 50 percent of the vote, which would have

allowed him to avoid the run-off on Feb. 24.

A third contender, independent candidate George Lillikas,

took 25 percent of the vote, according to the results so far.

COUNTRY'S SURVIVAL

Anastasiades has pledged a quick agreement with the European

Union and International Monetary Fund on a financial rescue,

which investors want agreed before the island's woes derail

progress in shoring up the rest of the euro zone's periphery.

"It is the survival of our country which is at stake,"

Anastasiades said earlier on Sunday after voting in the port

town of Limassol, accompanied by his three grandchildren.

Nailing down a deal has proven tricky because almost any way

of solving the crisis - from restructuring debt to slapping

losses on banks - could set a precedent for other troubled

states and damage sentiment just as confidence slowly returns to

the euro zone.

Fears that Cyprus will never be able to pay back its debt,

and German misgivings about its commitment to fighting money

laundering, have further complicated talks on a rescue, which

have dragged on for eight months.

Cyprus sought financial help last year after its banks

suffered huge losses from Greece's sovereign debt restructuring.

The island, which has been shut out of international financial

markets since May 2011, needs about 17 billion euros in aid - a

sum worth as much as its entire economy.

Reuniting Cyprus after its division nearly 40 years ago into

a breakaway Turkish Cypriot state in the north and the

internationally recognized southern state run by Greek Cypriots

has lagged far behind as an election issue.

Cypriots, still coming to grips with a cocktail of pay cuts,

tax hikes and benefit cuts imposed last year in preparation for

a bailout, have been little impressed by the election rhetoric.

"I hope that things will be better in terms of the economy

and jobs, but I doubt it," said Georgios Poullos, a 41-year-old

who is unemployed. "It's not in our hands. I think whoever gets

in won't change it."

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