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By Daniel Wallis and Andrew Cawthorne
CARACAS (Reuters) - President Nicolas Maduro's government won a majority of votes in Venezuela's local elections on Sunday, disappointing the opposition and helping his quest to preserve the late Hugo Chavez's socialist legacy.
With votes in from three-quarters of the nation's 337 mayoral races, the ruling party and allies had combined 49.2 percent support, compared with the opposition coalition and its partners' 42.7 percent, the election board said.
Since taking power in April, Maduro, a 51-year-old former bus driver, has faced a plethora of economic problems including slowing growth, the highest inflation in the Americas, and shortages of basic goods including milk and toilet paper.
Yet an aggressive campaign launched last month to force businesses to slash prices proved popular with consumers, especially the poor, and helped Maduro's candidates on Sunday.
"The father of the revolution has gone, but he left the son who continued helping the poor," said government supporter and pensioner Freddy Navarro, 62, in Caracas.
Sunday's election was the biggest political test for Maduro since he narrowly won the presidential election after Chavez's death from cancer ended his 14-year rule of the OPEC nation.
Winning the overall vote share may help Maduro shake off perceptions of weakness, enabling him to exert more authority over the different factions in the ruling Socialist Party and perhaps take unpopular measures such as a currency devaluation.
"The Venezuelan people have said to the world that the Bolivarian revolution continues stronger than ever," Maduro said in a late-night speech, referring to Chavez's self-styled movement named for independence hero Simon Bolivar.
OPPOSITION'S URBAN WINS
The government took nearly 200 municipalities, with three-quarters counted, reflecting the traditional strength of "Chavismo" in rural and poorer areas.
As expected, the opposition performed well in urban centers, keeping the principal mayorship of the capital, Caracas, and that of Venezuela's second city, Maracaibo. The opposition also won the capital of Barinas, Chavez's home state
But their failure to win the overall vote share was a blow to opposition leader Henrique Capriles' claim that he leads a majority. Capriles had repeatedly called for the vote to be seen as a referendum on Maduro's performance.
"I did everything humanly possible," Capriles said after the results were out. "Remember that Venezuela does not have a single owner. A divided country needs dialogue."
Opponents portray Maduro as a buffoonish autocrat with none of his predecessor's political savvy and say his continuation of statist economic policies - including the crackdown on retailers for alleged price-gouging - are disastrous.
In a triumphant speech in Bolivar Square in downtown Caracas, Maduro mocked Capriles and urged him to resign.
"They underestimate us. They call me a donkey, there is social racism," he said. "They said that today was a plebiscite, that Maduro would have to leave the presidency after today."
Despite the encouraging results for Maduro, he still faces a daunting task to right Venezuela's economy. Inflation has hit 54 percent annually, the local bolivar currency has tanked on the black market, power cuts are frequent, and shortages have spawned queues and irritation around the country.
Opposition activists alleged some irregularities on Sunday, including intimidation of some observers and the use of state oil company PDVSA's vehicles to ferry pro-government voters.
Capriles accused the government of intimidating local media to silence his voice and running the most unfair campaign in Venezuelan history. "I had to go round the country practically with a megaphone in my hand ... This campaign saw a brutal waste of Venezuelans' resources (by the government)," he said in a midnight speech.
But unlike April's vote, there was no call by Capriles for the results to be appealed or opposed.
The opposition's next chances to gain political ground are 2015 parliamentary elections and a possible signature drive for a recall referendum on Maduro in 2016.
WHAT NEXT FOR CAPRILES?
Some anti-government activists are pressing for more action, such as street protests, and Capriles may find his authority challenged within his coalition after Sunday's results.
"They did not achieve their objective of a protest vote against Maduro," local pollster Luis Vicente Leon said.
Since taking office, Maduro has maintained core support among "Chavistas" by keeping his popular welfare programs and repeating his rhetoric and politics.
Opponents and some economists say Maduro's price-cutting measures smack of short-term populism that do nothing to fix what they consider the roots of Venezuela's economic mess: persecution of the private sector, and rigid price and currency control systems.
"We're not giving up, we're going to keep fighting," said Oskeiling Lopez, 25, a bank manager and opposition supporter.
Voting was largely peaceful, though one newspaper reported a woman was shot dead in a queue in a western state.
(Additional reporting by Patricia Velez, Deisy Buitrago, Eyanir Chinea and Brian Ellsworth and Diego Ore; Editing by Brian Ellsworth, Kieran Murray and Paul Simao)