Australia's Victoria state election tightens with Labor ahead in polls

SYDNEY (Reuters) - Australia's Victoria state will vote to select its next government on Saturday in what polls predict to be a close-run contest with the incumbent Labor government's lead against the conservative coalition shrinking in the final campaign stretch.

Centre-left Labor was comfortably ahead during the initial stages of the campaign after eight years in power, but a poll done for The Age newspaper out this week showed voters cutting their support.

Labor is ahead 53-47% on a two-party preferred basis against the Liberal-National coalition, though that has dropped from 59-41% in the previous poll in October.

If the poll result is replicated at the election, Premier Daniel Andrews will likely remain the leader of Australia's second-most populous state for a third straight term, but may not form a majority government.

Andrews on Friday said Victoria needed a "strong, stable majority government" when reporters asked him if Labor would consider making deals with independents should it fall short of a majority.

Four years ago, Labor returned to power in a landslide, winning just under two-thirds in the 88-seat Victorian legislative assembly. But this time it could lose about a dozen seats, the Herald Sun reported, citing a separate poll.

Bookmaker Sportsbet said the prospects of the coalition had firmed on election eve. "At this stage, it looks like a Labor win, but whether it will be a majority is unclear," it said.

Going into the campaign, both fronts have pledged millions to spruce up the state's infrastructure, education and healthcare system.

Labor said it would build a rail loop project for state capital Melbourne, which local media estimates will cost about A$125 billion ($85 billion), but the coalition led by Matthew Guy said it would shelve that, if elected.

As of Thursday, more than 1.63 million votes and around 273,000 postal votes out of a total of 4.4 million have been cast since early voting began on Nov. 14, data from the Victorian Electoral Commission showed.

($1 = 1.4782 Australian dollars)

(Reporting by Renju Jose; Editing by Paul Simao)