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REFILE - INCLUDING TRANSLATION A supporter holds a picture of Austrian far right Freedom Party (FPOe) presidential candidate Norbert Hofer during his final election rally in Vienna, Austria, May 20, 2016. The words on picture reads "The voice of reason". REUTERS/Leonhard Foeger

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By Michael Shields and Francois Murphy

VIENNA (Reuters) - Austria's presidential election was too close to call on Sunday, meaning postal ballots were set to determine whether a eurosceptic anti-immigration candidate would become the European Union's first far-right head of state.

A victory for Freedom Party candidate Norbert Hofer would be a landmark triumph for resurgent populist parties across Europe that have capitalised on Europe's migration crisis and widespread dissatisfaction with traditional parties of power.

It would be all the more remarkable for being in a prosperous country with low unemployment, where two centrist parties have dominated since it emerged shattered from World War Two after its annexation by Nazi Germany in 1938.

"The sovereign has spoken," Hofer's opponent, former Greens leader Alexander van der Bellen, told broadcaster ORF. "What exactly it has said - Hofer or van der Bellen - we will know tomorrow afternoon."

A projection by the SORA institute for broadcaster ORF, based on 100 percent of votes cast in polling stations and an estimate of the outcome of postal voting, showed a statistical dead heat on 50.0 percent each. The margin of error was 0.7 percentage point.

The provisional result from the Interior Ministry, which did not include postal ballots, showed Hofer ahead with 51.9 percent to van der Bellen's 48.1 percent.

Postal votes will not be counted until Monday and their exact number is not known. They tend to be used by the more highly educated, a spokesman for SORA said, a group among which 72-year-old van der Bellen has greater support.

Interior Minister Wolfgang Sobotka said he expected there would be about 750,000 postal ballots, roughly 12 percent of Austria's 6.4 million eligible voters.

WATERSHED

"I have been in politics a long time and I have never experienced an election night like this," Hofer, 45, told ORF.

Support for groups like his eurosceptic, anti-immigration Freedom Party (FPO) has been rising in various countries, whether they have taken in many migrants in the recent influx, like Germany and Sweden, or not, like France and Britain.

Most are still far from achieving majority support, meaning Sunday's election is a watershed regardless of who wins.

"Norbert Hofer has achieved an enormous success today," FPO leader Heinz-Christian Strache said. "People recognise there are outdated old political structures, old parties also in other European countries that operate with outdated mindsets."

The president traditionally plays a largely ceremonial role but swears in the chancellor and can dismiss the cabinet.

"I have to work for one or two years and then everybody will see that I am OK, I am not a dangerous person," Hofer told reporters after voting in his eastern hometown of Pinkafeld.

Austria took in 90,000 asylum seekers last year, more than 1 percent of its population, many of them shortly after it and neighbouring Germany opened their borders last autumn to a wave of migrants including refugees from Syria's civil war.

The government has since clamped down on immigration and asylum, but that failed to slow rising support for the FPO, which was already capitalising on widespread frustration with Austria's two traditional parties of government.

Sunday's run-off election comes four weeks after Hofer won the first round with 35 percent of the vote. That was unexpectedly high although opinion polls regularly show his party ahead of its rivals on more than 30 percent.

Van der Bellen scored 21 percent in the first round.

Tabloid reports of immigrants availing themselves of Austria's generous benefits and of crimes in which immigrants have been suspects have played into the FPO's hands.

But van der Bellen and his camp expressed delight at largely clawing back their 14-point deficit against Hofer.

"It is a photo finish, a heart-stopping finale," van der Bellen's campaign manager Lothar Lockl told ORF. "In soccer, you would say that this game is going into extra time."

(Additional reporting by Alexandra Schwarz-Goerlich in Vienna and Suzana Sabljic in Pinkafeld, Austria; Editing by Tom Heneghan)

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