LIMA, June 10 (Reuters) - The count to determine Peru's next president slowed and narrowed again as it entered its fourth day on Wednesday with the race still up in the air and likely to be decided by a lengthy legal battle over contested ballots.
With most of the domestic ballots already counted, conservative Keiko Fujimori narrowed leftist Roberto Sanchez's lead with an influx of votes from outside the country.
Sanchez took the lead on Monday, boosted by rural votes, and was up by as much as 50,000 before Fujimori began cutting into his lead on Tuesday. Sanchez now leads by 50.025% to Fujimori's 49.975% with Peru's electoral ONPE authority reporting 97.90% of the votes tallied.
Only about 10% of the polling stations left to be counted are from within Peru, while the remaining are from abroad. The foreign vote has largely fallen in Fujimori's favor, where she currently leads with about 63%.
But all those votes represent just a fifth of the remaining 2.1% of pending polling stations yet to be tallied. The remaining 80% are contested ballots that will go to judicial review.
Omar Awapara, secretary general of local election-monitoring group Transparencia, said due to how close the race is, it's likely the winner will be decided during a review by Peru's Special Electoral Jury.
"We'll get to a point when the difference between the candidates is greater than the (contested) votes left to be counted, and then it will be clearer," Awapara said, adding that there are roughly 400,000 votes in the contested polling stations.
"There are still a lot of votes left to be counted that can sway things one way or the other," Awapara said, adding that the whole process could take a few weeks before a winner is determined.
Both candidates have repeatedly called for patience and have avoided making definitive statements before the full vote is counted. But Sanchez, who led the Ipsos quick count on Sunday that accurately predicted previous races, has begun to harden his tone on the count.
"Democracy must be defended," Sanchez told reporters on Wednesday. "We have requested a meeting (with international observers) to exchange views on all these strange, unusual, and questionable developments that are developing."
Observers for the Organization of American States and the European Union said on Wednesday that the vote had been carried out normally and a final count was necessary due to the race's slim margin.
MARKET RESPONSE
Markets largely settled earlier this week following a sharp selloff on Friday after Sanchez, who has vowed vast economic reforms, rose in the polls. Peru's main stock index closed up 0.68% on Wednesday while the sol currency was down 0.53% against the dollar to 3.40.
"Markets are banking on Fujimori getting over the line thanks to expatriate votes from abroad, which tend to lean conservative," said Eileen Gavin, principal Americas analyst at risk intelligence company Verisk Maplecroft.
"Markets are also assuming that regardless of who wins, the more conservative hue of the lower house and newly returning Senate will act as a restraint on any populist executive impulses."
(Reporting by Alexander Villegas and Marco Aquino; Editing by Bill Berkrot)
