Ollanta Humala, a leftist former army commander, has claimed victory in Peru's presidential poll, as partial official results show him holding a razor-thin lead.
He claimed victory and results from 89 per cent of ballot boxes gave him a lead of more than 2.7 percentage points over Keiko Fujimori, the daughter of the jailed former president, Alberto Fujimori.
The first official count represented a higher proportion of urban votes, which tend to favour Fujimori, election officials said.
The news of Humala's imminent victory caused Peru's stock market to sink more than 12.5 per cent, its biggest loss ever, before trading was suspended until on Tuesday.
The sol currency fell 1.5 per cent, prompting the central bank to offer to sell about $215 million in deposit certificates aimed at curbing the currency's fall.
Humala, 48, has dropped some of his more radical proposals since narrowly losing the last election in 2006 and senior advisers tried to reassure markets on Monday that he will run the economy prudently, but many investors simply do not trust him.
Shares in mining companies fell as much as 15 per cent because Humala has said he wants to impose a windfall tax Humala on Peru's vast mining sector.
Major firms from neighbouring Chile that have units in Peru also saw their shares fall sharply while Peru's sovereign bonds plunged in New York on the vote outcome.
Investors worry that Humala, who takes office on July 28, will increase state control over the fast-growing economy and throw away fiscal discipline.
Ismael Benavides, Peru's finance minister, told the Reuters news agency that the country has a "contingency plan" to inject liquidity into markets if they suffer due to speculation.
Humala allied himself closely with the socialist Venezuelan leader, Hugo Chavez, in his first run for the office in 2006, which he narrowly lost to Alan Garcia. This time he softened his rhetoric and disavowed Chavez, promising instead to follow Brazil's market-friendly model.
Investors have tended to be more comfortable backing Fujimori, 36. Fujimori accused Humala of planning to dismantle free-market reforms that her father put in place. The reforms spurred an unprecedented economic surge over the past decade, after years of guerrilla wars and economic chaos.
Alberto Fujimori defeated a Maoist rebel army, but fled into exile in 2000 after his government was hit by a series of scandals. He is now serving a 25-year prison sentence for corruption and ordering the use of death squads against suspected leftists.
In sharp contrast to the gloom in investor circles, Humala's supporters have been celebrating. They chanted slogans in the commercial district of Lima, the capital, and waved red and white flags while dancing in a crowd of about 5,000 people on Saturday.
"The results have been given, the quick counts show us that we've successfully got here and we've won the elections in Peru," Humala shouted over a cheering crowd, many waving red and white Peruvian flags.
"Keiko is done," read one banner as an effigy of Alberto Fujimori was burned. He was president through the 1990s, until his government collapsed under a cloud of corruption and human rights scandals.
"Fujimori never again," read another banner.
Mirko Lauer, a political analyst, told Al Jazeera that "Humala has managed [to win support] by moving to the centre-right to produce a feeling of confidence".
Lauer said that a victory for Humala would be very significant.
"Mr Humala would have to produce a Brazilian-type government that will sort of mix the left in politics with the right in the economy, and produce a type of social policy that will get him across."
Source: Al Jazeera and agencies