UPDATE 4-Santos takes strong lead in Colombia election

* Santos seen continuing policies on security, economy

* Colombia more worried about jobs than rebel violence

(Recasts with results)

By Patrick Markey and Jack Kimball

BOGOTA, June 20 (Reuters) - Former Colombian defense minister Juan Manuel Santos has taken a strong lead in a run-off election to succeed President Alvaro Uribe, according to preliminary voting results on Sunday.

Santos, an Uribe ally, had 68.98 percent against rival and former Bogota mayor Antanas Mockus with 27.48 percent with 20 percent of poll stations tallied, election authorities said.

Investors will applaud a victory by Santos as a continuation of Uribe's security and pro-business policies. A Santos would also maintain favorable support for the peso COP=RR and local TES bonds.

Uribe steps down in August. He was unable to run for re-election after a constitutional court barred him from seeking a third term. A popular leader, Uribe's presidency has led an unceasing war on rebels who once controlled large swaths of Latin America's No. 4 oil producer.

In a sharp reminder of the country's conflict, seven police officers died in a rebel land mine blast near the Venezuelan frontier, and three troops and six FARC guerrillas were killed in separate combat in the center of the country.

Santos, a U.S. and British-educated economist, easily won a May 30 first round vote, falling just short of the 50 percent he needed to avoid a run-off.

He held a wide lead in polls before the run-off against Green Party candidate Mockus, who had challenged traditional parties in the campaign with a call for clean government.

The next president must tackle double digit unemployment, a stubborn fiscal deficit and tricky ties with neighboring Venezuelan President Hugo Chavez, who has cut trade in a dispute slowing Colombia's economic recovery.

Colombians applauded Uribe for making the country safer. But his second four-year term was marred by scandals over corruption and abuses, including arrests of lawmakers for colluding with militias and a probe into state spies wiretapping his critics.

Once branded a failing state, Colombia's long war ebbed as Uribe sent troops backed by helicopters and better military intelligence to drive back FARC guerrillas with the help of billions of dollars in U.S. military aid.

But with Colombia's economy slowly recovering from the global crisis, polls show voters now want the new government to address unemployment, a large informal economy and a public healthcare system in shambles.

The winner must also manage relations with leftist Andean neighbors, especially Chavez, a Cuba ally who sees Colombia's close ties to Washington as a threat to his OPEC nation. He has restricted Colombian imports in protest over their dispute. (Writing by Patrick Markey in Bogota; editing by Chris Wilson)