July 5 (Bloomberg) -- Andres Manuel Lopez Obrador led in a recount of Mexican election ballots that authorities say will determine the outcome of the nation's closest ever presidential vote.

Lopez Obrador, the candidate from the opposition Party of the Democratic Revolution, had 36.6 percent of the vote while Felipe Calderon of President Vicente Fox's National Action Party had 34.7 percent, based on 82 percent of ballots counted.

The results conflict with a preliminary tally that showed Calderon ahead of Lopez Obrador by 1 percentage point. Stocks, bonds and the currency tumbled today on concern that Calderon, who has vowed to stick with Fox's economic policies, may lose.

``It's impossible to arrive at any conclusion with this information,'' said Paulo Leme, managing director for emerging markets at Goldman Sachs Group Inc. in Miami. ``We don't have information on the sampling.''

Preliminary results -- released on July 3 after counting 98.5 percent of ballots -- showed Calderon led Lopez Obrador by 402,708 votes. Calderon had 36.38 percent while Lopez Obrador had 35.34 percent, according to the preliminary count. Both candidates claimed victory, and Lopez Obrador vowed to challenge the results in court unless electoral authorities agree to recount every ballot, saying he had found evidence of interference and fraud.

`Clean' Elections

``These were clean and exemplary elections,'' Luis Carlos Ugalde, president of the electoral institute, said at a press conference today. ``Certain things have come up as issues because of the tight margin.''

About 4,000 Mexican electoral workers and private citizens scrutinized ballots, sequestered at 300 district stations across the nation to review tally sheets. They have been recounting votes one by one on all sheets with discrepancies. Each district has a 13-person board that plans to go over an average 434 tally sheets.

The election marks the first time in the Latin American country's history that authorities didn't name a victor following the preliminary hand count. Arturo Sanchez, a board member at the institute, expressed confidence yesterday in the initial count, saying it has proven accurate since the system was introduced in 1997 and never differed from the final recount by more than 0.4 percentage point.

``We've never seen a reversal of preliminary results,'' Sanchez said in an interview in Mexico City. ``But because this election was so close, we had to be more cautious before announcing a winner.''

Excluded Ballots

The institute said yesterday that it excluded 2.58 million votes from the preliminary count because the tally sheets that contained those votes had inconsistencies such as illegible markings. If included in the preliminary count, those votes would have narrowed Calderon's lead over Lopez Obrador to 257,532 votes, or about 0.6 percentage point. Those votes will be included in the recount, authorities said.

Mexico's benchmark Bolsa stock index dropped 4 percent today, its steepest fall in three weeks. The government's 8 percent peso-denominated bond due December 2015 had its biggest price decline since it was issued in January. The peso dropped 1.6 percent to 11.25 pesos to the dollar, reversing gains posted earlier in the week.

Lopez Obrador, 52, promised to spend more on pensions and social programs and stop signing free-trade accords that he says only benefit the rich. His message resonated among millions of poor Mexicans -- especially those in the south of the country -- who can't afford housing, shoes, clothes or electricity.

Calderon, a 43-year-old former energy minister who dubbed himself the ``President of Employment,'' vowed to attract investment and create jobs by keeping free-trade policies and public spending restraints that have curbed inflation and lowered interest rates.

To contact the reporter on this story: Adriana Arai in Mexico City at aarai1@bloomberg.net

Last Updated: July 5, 2006 20:53 EDT