By Alexander Villegas and Marco Aquino
LIMA, June 9 (Reuters) - Peru's conservative Keiko Fujimori inched closer on Tuesday to matching leftist Roberto Sanchez's lead as the presidential race tightened with overseas ballots bolstering her amid market volatility, though pending rural votes could still favor Sanchez, observers told Reuters.
Peru's main stock index was up 5.65% Tuesday morning while U.S.-listed shares of Peruvian stocks like miner Buenaventura rose 1.8% and Intercorp Financial Services was up 12.2%; the iShares MSCI Peru and Global Exposure ETF jumped 4.6%.
The local sol currency was also up 2.4% against the dollar to 3.39.
The rise is largely a reversal of a sharp selloff on Friday after Sanchez, who rattled markets and investors with proposals to revamp Peru's mining-heavy economy, rose in the polls.
He has advocated for reforming the constitution, imposing windfall taxes, a wealth tax and reforming mining concessions, a popular platform among the country's rural voters. His rival Fujimori has leaned into the tough-on-crime legacy of her father, Alberto Fujimori, Peru's authoritarian former president, who was jailed for human rights abuses in connection with massacres under his tenure.
Fujimori led exit polls and the early count, but Sanchez gained ground on Sunday and Monday as votes from Peru's rural regions rolled in. Sanchez's lead rose to nearly 50,000 votes on Monday but is down to 20,000 as overseas ballots continue to be counted.
Sanchez currently leads with 50.06% to Fujimori's 49.94% with 95.98% of the vote counted. Alfredo Torres, the head of pollster Ipsos, said that while the remaining rural vote tends to favor Sanchez, a large part of the pending vote is from outside the country, which is favoring Fujimori.
About 1.67% of ballots have been flagged for review. Most are from the Lima metropolitan region, which also favors Fujimori.
"Doing the math, it's possible that the numbers we're seeing now could be reversed," Torres said, speaking to a local radio station.
Both candidates have called for patience and for 100% of the votes to be tallied. Peru's ONPE electoral authority said a full count is expected in July.
"There's a lot of hope, especially in the foreign vote and contested ballots because most are from the capital, where we have the most support," Fujimori told reporters on Tuesday. "But I think it would be premature to declare a winner."
In a press conference on Tuesday, party representatives for Sanchez's party, Together for Peru, reiterated the need to wait for all votes to be counted and said pending votes in rural regions still give Sanchez a chance to win the presidency.
In his speech over the weekend, Sanchez said he aims to answer the call of a popular movement towards justice and a standard of democracy.
"As a peaceful people, as a people who respect the electoral process, we will walk the path of the official results, but today we are convinced of the support of the popular movement," he said.
(Reporting by Alexander Villegas and Marco Aquino; Editing by Aurora Ellis)
