UPDATE 4-Venezuela's Capriles wins opposition primary
* Sources in his and rival's camp say Capriles wins
* Chavez still leads polls ahead of Oct presidential vote
By Marianna Parraga and Deisy Buitrago
CARACAS, Feb 12 (Reuters) - Venezuelan state governor Henrique Capriles won an opposition primary on Sunday, setting up a potentially close battle with President Hugo Chavez in the South American OPEC member nation's October vote, sources said.
Official results had not been released by mid-evening, but a senior Capriles ally told Reuters he had won, and the governor's camp set up a stage at their Caracas headquarters in apparent preparation for victory celebrations.
"Yes, of course, he won well," opposition colleague Leopoldo Lopez told reporters when asked if the Miranda governor was victorious.
Several aides to Pablo Perez, Capriles' main competition and the governor of Zulia state, also told Reuters their candidate had lost the Democratic Unity coalition election.
Turnout appeared to be around the 2 million mark - a figure the opposition will hail as a strong showing ahead of their campaign to end 13 years of Chavez's socialist "revolution."
The reaction of losers in Sunday's opposition primary will show if the coalition is ready to rally behind the winner and mount a dynamic campaign that could chip away at Chavez's popularity ahead of the Oct. 7 presidential election.
If confirmed as the coalition candidate, the center-left Capriles, 39, will play up his youthful energy and experience governing Miranda state to counter Chavez's vast government spending and popularity among the poor.
Thwarted by the wily Chavez since 1998, Venezuela's opposition sees the election as its best chance to end what it views as a disastrous, Cuban-style socialist rule that has scared investors and wrecked the economy.
Chavez supporters say the opposition represents an old, discredited political elite who paid scant attention to the poor majority in the past and will never beat the president. Polls show Chavez has an edge heading into the October election.
Chavez, 57, has won almost all of a dozen or so national votes in Venezuela since taking power in 1999, and has survived national strikes, massive street protests and even a brief military coup that toppled him for 36 hours.
"I aim to be a president who talks much less, who doesn't invade Venezuelans' personal lives so much," Capriles said this week in a pointed reference to Chavez's longwinded speeches, which local media are often obliged to run live.
Capriles hails Brazil's market-friendly but socially conscious policy model as his inspiration and has said he would take a "no shocks" approach to dismantling Chavez's statist economic policies, such as currency controls.
He might, though, move faster to end controversial friendships with anti-U.S. figures like the leaders of Iran, Cuba and Belarus.
Sunday's voting was smooth with long, orderly lines around pro-opposition neighborhoods of the capital Caracas, where walls were plastered with the candidates' posters. Young activists rode motorbikes exhorting voters to head to the polls.
Chavez strongholds were largely devoid of opposition propaganda, however, and state TV gleefully broadcast images of some semi-deserted polling centers with just one or two voters.
Reading a newspaper in a sunny square deep in the pro-government January 23 area on hills above Chavez's presidential palace, 66-year-old retired pharmacy assistant Ramon Paraera said no one would beat the president. "Chavez is helping the people. He's with the people, not the bourgeoisie," he said, sitting below a mural of revolutionary heroes including Ernesto "Che" Guevara.
Peru's conservative Nobel literature laureate Mario Vargas Llosa praised the coalition for transcending the mediocre, divided opposition of Venezuela's past and avoiding "cannibalism" during the primary - in contrast to the U.S. Republican race going on to the north.
"Who says there can't be a Venezuelan spring?" he wrote.
At stake is control of the biggest crude reserves in the world and state oil company PDVSA, which despite declining output still sends more than three-quarters of a million barrels a day to the United States and about half a million to China.
Chavez has nationalized almost all Venezuela's oil industry over the years, kicking out U.S. majors and putting PDVSA in charge of multibillion dollar projects. The opposition deny government allegations they plan to privatize the company.
Never out of the spotlight for long, Chavez attended a rally on Sunday to celebrate the 198th anniversary of the "Batalla de La Victoria" ("Battle of Victory") there against Spanish forces.
Following cancer surgery last year, Chavez seems to be continuing to recover and is making ever longer TV appearances, including a record speech last month of nearly 10 hours.
"We cannot let Venezuela lose its independence," said Chavez, who often mocks his political foes as U.S. stooges and sell-outs. "Especially not after these 13 years of battle."
The former soldier pledges "more socialism" for Venezuela if he wins re-election, while the opposition are stressing their commitment to addressing Venezuelans' non-ideological concerns -- crime, unemployment and social services.