A right-wing retired general promising a crackdown on rampant crime led Guatemala's presidential election Sunday, although he fell short of the votes needed to avoid a runoff in November.

Otto Perez, 60, who promises to send troops into the streets to fight criminal gangs, had 37 percent support with more than 80 percent of the votes counted, far short of getting more than 50 percent of the ballots as needed for an outright first-round victory.

Centrist Manuel Baldizon, a wealthy hotel owner and former congressman with a populist message of supporting the elderly and the poor, had 23 percent of the vote and seemed certain to face Perez in a Nov. 6 runoff.

Perez's share of the vote was less than earlier opinion polls had indicated. But his showing suggests he is well-placed to win in the second round. Fellow rightist candidate Eduardo Suger, an academic, was in third place with about 17 percent support and many of his supporters could turn to Perez in the run-off.

When the tallies came in well after midnight, Perez said he was not worried about winning enough support in the second round, when the candidate with the most votes wins.

We are confident that in the next round, the second round on November 6, we will win again and win by a strong margin, he told reporters early on Monday.

If he does win, he would be the first former army officer to take power since Guatemala returned to democracy in 1986 after decades of military rule.

Perez's main campaign promise was a mano dura -- or firm hand -- against violent street gangs and Mexican drug cartels that have moved into Guatemala, using it as a key route in smuggling South American cocaine to the United States.

Mano dura policies in other Central American countries like El Salvador have meant sweeps by security forces to jail youths just for belonging to street gangs.

Human rights groups warn that Perez's tough crime-fighting message may have a dark side in a country with a history of extra-judicial killings by security forces.

Still, with around a dozen murders a day in a country of 14.7 million people -- smaller than the U.S. state of Florida -- many voters say they have had enough.

See a thief, kill a thief. Forget locking them up, said Perez supporter Hilda Lopez, lifting aloft her finger marked with ink to show she had voted.

Perez commanded troops during a brutal 1960-1996 civil war against Marxist guerrillas when a quarter of a million people were killed and the army committed many massacres. He also served as head of the military intelligence unit accused of engineering shadowy assassinations of political rivals.

But he denies accusations of wrongdoing, there are few specific claims against him, and many voters more concerned about current problems shrugged off his civil war past.

STUMBLING BLOCK

President Alvaro Colom and his wife, first lady Sandra Torres, could make Perez's path to the presidency more difficult if they throw their support behind Baldizon, who defected from their ruling UNE party in 2008 to form the Renewed Democratic Liberation Party, or Lider.

Torres was the UNE's candidate in this race but was knocked out by a rule banning the president's close relatives from seeking office, even after she tearily divorced her husband to try to skirt the rule. Many of her supporters then swung over into Baldizon's camp. But Perez brushed off the threat, and told Reuters in an interview that all the UNE supporters who wanted to vote for Baldizon had already done so.

A deeply religious 41-year-old, Baldizon pledges to continue Colom's popular cash and food programs for the poor but he also holds more conservative views like reviving the death penalty.

Perez softened his tone in his second bid for the country's top office -- he lost the 2007 race to Colom -- and promises more social spending to counteract deep inequalities between the wealthy elite and the rural, largely indigenous poor.

The winner of the election will face a grave fiscal situation with the government pulling in one of the lowest tax rates in the Western Hemisphere, just 10 percent of gross domestic product.

That, and a widening fiscal deficit expected to reach 3 percent next year, prompted Standard & Poor's to warn last month of a potential credit rating downgrade.

The next government will have to get serious about fiscal reform, Guatemalan economic analyst Luis Linares said. There have been a lot of anti-tax evasion proposals but they have no teeth. Tax evasion is around $1 billion per year.

Perez will likely have a hard time convincing powerful business leaders who supported his campaign to pay more taxes, and his right-wing Patriot Party will not have a majority in the 158-seat Congress.

Stopping short of proposing new taxes, Perez wants to raise mining royalties from 1 to 10 percent to draw more revenue from the country's gold and nickel mines.

Baldizon, born near Guatemala's lawless border with Mexico, plans to repeal a 12 percent sales tax in favor of a 5 percent flat tax, a proposal knocked by some economic experts.

No presidential hopeful in the coffee- and sugar-exporting nation has won outright in the first round since democracy was restored 25 years ago.

The only leftist in Sunday's election, well-known Mayan rights activist and Nobel Peace Prize winner Rigoberta Menchu, won just under 3 percent of the vote.

(Reporting by Mica Rosenberg, Mike McDonald and Herbert Hernandez; Editing by Kieran Murray)

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