June 13 (Bloomberg) -- Luxembourg Prime Minister Jean-Claude Juncker's Christian Democrat party won national elections today, television projections showed, putting the 49-year-old leader, Europe's longest-serving, on track for his third five-year term.

The results indicate that the Christian Democrats will form a coalition with the Socialists, returning the party to power after five years in opposition. The Christian Democrats won 36 percent of the vote, according to exit surveys broadcast on Luxembourg's RTL television station. The Socialists edged out the Liberal Party, winning 23 percent compared to the Liberals' 16 percent.

Juncker has assured Luxembourg voters that new EU tax rules won't handicap the country's banking sector, which employs 11 percent of the workforce and adds about a quarter to the Grand Duchy's gross domestic product.

``Juncker played an important role in the savings tax debate and that helped him,'' said Philippe Poirier, an assistant professor of political science at the University of Luxembourg.

Juncker has also presided over a growing economy. The country's GDP per capita was more than twice the EU average last year. The European Commission, the EU's Brussels-based executive, forecasts Luxembourg's GDP growth at 2.4 percent this year compared to 1.7 percent for the 12-nation euro zone.

About 217,000 voters went to the polls today in four regions of Luxembourg, where voting is mandatory.

International Presence

The prime minister owes his popularity to his strong media presence and his visibility on the international stage, analysts said. Juncker, who has named as a possible commission president in European media, said that he'll remain in Luxembourg if he's re- elected.

``He's personally very popular because he has a European dimension,'' said Fernand Fehlen, a political researcher at the University of Luxembourg. ``Voters like his strength on the international stage.''

Luxembourg was one six nations that formed a coal and steel union in 1952 that later became the EU. Juncker assured that Luxembourg would retain its right to appoint a commissioner at the Brussels-based executive. Luxembourg, with 441,000 people, also kept its disproportionate weight in setting EU policies under a complex voting system.

Euro, Banking

Juncker, who also serves as finance minister, gained prominence in his first term as a leading figure in writing the fiscal rules that underpin the EU's common currency.

During his second mandate, Juncker successfully argued that Luxembourg should be able to keep its banking secrecy rules. The final agreement, which takes effect next January, forces Switzerland to impose a withholding tax on foreigners' bank and bond interest income at the same rate as Luxembourg.

``Juncker is seen as protecting Luxembourg's interests and keeping a level playing field with our competitors,'' said Lucien Thiel, general manager of the Luxembourg Banking Association. Thiel is a Christian Democrat candidate in today's election.

Voters see Juncker as the best-placed politician to make sure Luxembourg's voice isn't drowned out in a 25-member EU, said Poirier. He'll assure that ``small countries can have a place in the Europe of 25.''

``He's very appreciated on the international scene,'' said Pierre Nicolay, 48, a resident of Luxembourg City's historic old city who voted for the prime minister. ``He's very good at finding a consensus.''

To contact the reporter on this story: Matthew Newman in Luxembourg at Mnewman6@bloomberg.net.

Last Updated: June 13, 2004 13:45 EDT