PRETORIA - South Africa's ruling ANC headed for election victory on Thursday despite a reinvigorated opposition challenge and party leader Jacob Zuma was easily on course to become president weeks after beating graft charges.

Early results showed the African National Congress with 66.07 percent, battering the hopes of the Congress of the People (COPE) party, formed by ANC dissidents, that it might pose the first real challenge since the end of apartheid in 1994.

The latest results showed the ANC edging toward keeping its two-thirds majority, which would enable the party to change the constitution and entrench its power further. Results from a number of ANC strongholds were still outstanding.

Zuma portrays himself as a champion of the poor, and for many voters the ANC's credentials from the fight against white minority rule still outweigh frustrations with its failure to tackle widespread crime, poverty and AIDS.

We have been talking about a decisive victory, which we think is in sight, said ANC Secretary General Gwede Mantashe.

COPE won just over 8 percent of the early votes counted. The biggest challenge came from the Democratic Alliance -- led by a white woman -- with 16.7 percent.

The DA pulled ahead of the ANC in the Western Cape province -- South Africa's premier tourist destination, which is currently controlled by the ANC -- winning 51.54 percent of the votes counted by early afternoon.

I feel very good about the national results ... We are just above 50 percent in the Western Cape, that is what we were hoping for because it means we have doubled our numbers since last time, DA leader Helen Zille said.

The ANC won 45.25 percent of the Western Cape vote in the 2004 elections.

Opposition parties hoped to at least deprive the ANC of the two-thirds parliamentary majority that lets it change the constitution and entrench its hold, but with a quarter of the vote counted it was unclear that would be the case.

I think it could go either way for the ANC in terms of the two-thirds majority, said political analyst Adam Habib of the University of Johannesburg.

ZUMA VICTORY

The final result is not expected before Friday but there is little doubt the 67-year-old Zuma will become president only three weeks after managing to get prosecutors to drop an eight-year-old corruption case that had tainted his reputation.

The rand firmed slightly early on Thursday after the smooth election, but later gave up the gains.

Investors are worried this morning, however, about the two-thirds level given that it is pretty close and as we are still so early through the count, markets are edgy even if the currency has not moved much, Nomura analyst Peter Attard Montalto said in research note.

Among Zuma's first tasks will be reassuring foreign investors who fear trade union allies will push him toward the left at a time the continent's biggest economy could already be in recession for the first time in 17 years.

He has repeatedly said there will be no nasty surprises in store for investors and his room for policy maneuver is limited because of the global downturn. Finance Minister Trevor Manuel, a market favorite, is expected to stay for now.

Zuma has also pledged to tackle the rampant violent crime which could mar next year's hosting of the soccer World Cup.

I'm giving the ANC one last chance to deliver and I am hoping that they will deliver this time and if they don't, things will have to change next time, said Herry Nkosi, 39, an accountant.

Election officials estimated the turnout in Wednesday's vote at 76 percent -- the same as 2004, when the ANC won 70 percent of the vote.

Police said the election was largely peaceful, although COPE said one of its officials was shot dead in what it believed to be a political killing.

South Africa Jacob zuma