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By Kevin Gray
MONTEVIDEO (Reuters) - Uruguayans cast ballots in a presidential election on Sunday pitting a former guerrilla leader against a conservative ex-president with both men vowing to maintain market-friendly policies in one of South America's most stable economies.
Polls show Jose Mujica, 74, a plain-talking senator who fought with the Tupamaros movement during the 1960s and early 1970s, easily finishing first but just short of an outright majority to avoid a runoff.
His main rival is Luis Lacalle, a former president who held office from 1990 to 1995 and has sought to capitalise on some voter resistance to Mujica's militant past.
The winner will replace President Tabare Vazquez, Uruguay's first socialist leader, who leaves office highly popular after five years of vigorous economic expansion in the small, beef-exporting country between Brazil and Argentina.
Mujica is competing for the presidency as part of the ruling party Broad Front coalition, a grouping of socialists and other leftist parties that came to power four years ago in South America's regionwide political shift to the left.
Some Uruguayan business leaders worry Mujica could veer Uruguay more sharply to the left even though he has pledged to stay on a free-market track.
"I want to tell the rest of the world that this little but serious country is worth investing in," Mujica, who served as agricultural minister under Vazquez before being elected to the Senate, told reporters on Saturday.
Uruguay, like Chile and Brazil, has become a model of stability and moderate leftism in Latin America, as other countries have elected more radical leaders.
Mujica was held in solitary confinement during Uruguay's 1975-83 military dictatorship for years in a deep well for his activities with the Tupamaros, who carried out political kidnappings and robberies. He was a high-level leader of the group but has never spoken publicly about the extent of his role.
His sometimes blunt off-the-cuff comments have raised questions among some Uruguayans about his ability to lead the country.
During the campaign, Mujica made headlines in neighbouring Argentina after he called Argentines "hysterical" and "stupid" in a series of interviews for a book intended to promote his presidential bid.
Roberto Garcia Burgo, a 72-year-old retiree who voted early on Sunday, said he was backing Mujica because he did not appear to be an ordinary politician. "We've all said things we didn't mean. Mujica now seems to be looking to the future, not the past," he said.
Hoping to reach out to the business community, Mujica turned to Vazquez's former economy minister as his vice presidential running mate.
Danilo Astori won investor praise for his guidance of the largely agricultural-based economy and Mujica has said he wants Astori to play a key role in shaping economic policy.
Under Vazquez, the Uruguayan economy has attracted millions of dollars in foreign investment in soy farming and cattle ranching.
Lacalle, a 68-year-old lawyer who is Mujica's chief opponent, has engineered a political comeback 14 years after leaving office amid corruption accusations involving several of his top aides.
He has sought moderate voters, pledging not to launch a privatization campaign and maintain a government role in the economy if he wins.
One early poll shows Mujica holding a single-digit lead if a November 29 second round vote is needed.
Lacalle, lagging some 15 percentage point in the polls, has his eyes on the possible run-off, where he can try to win over voters whose first-round support might go to third-place candidate Pedro Bordaberry from the conservative Colorado Party.
Uruguayans also were voting in a plebiscite on whether to annul a law shielding military and police officers from prosecution on charges of human rights abuses during the dictatorship.
(Additional reporting by Julio Villaverde and Patricia Avila; Editing by Fiona Ortiz and Bill Trott)

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