UPDATE 3-Absent Chavez dominates Venezuelan state elections
* Opposition leader Capriles fights to retain governorship
* Turnout thin, Venezuela focused on Chavez's health
* Though in Cuba, president's image everywhere for vote
By Andrew Cawthorne and Marianna Parraga
CARACAS, Dec 16 (Reuters) - Venezuela held state elections on Sunday that will define the future of opposition leader Henrique Capriles and test political sentiment ahead of a possible new presidential vote if Hugo Chavez is incapacitated by cancer.
The vote for 23 state governorships, seven of which are currently controlled by the opposition, has been overshadowed by the president's battle to recover from cancer surgery in Cuba.
Capriles, 40, needs to hold on to the governorship of Miranda state to remain the opposition's presidential candidate-in-waiting, while both sides will want a good showing to create momentum in case of a showdown over who replaces Chavez.
"This regional election has great strategic importance for the nation's daily life and political stability," said Elias Jaua, a former vice president running against Capriles for the governorship of Miranda state, as he placed his vote.
Despite the stakes, turnout appeared to be thin in contrast to the long lines for the presidential ballot two months ago, which handed the socialist Chavez a third term in the South American OPEC nation with the world's largest reserves.
"I'm surprised. In the presidential election I got here at 3 a.m. and there were a lot of people in line. Today I got here at 5 a.m. and I was the first person," said Nathaly Betancourt, who was voting in the western city of Punto Fijo.
Opposition sympathizers complained that centers in affluent anti-Chavez sectors of Caracas crucial for Capriles were notably empty. Many Venezuelans have already left on Christmas holidays.
The nation was more focused on Chavez's recovery in Cuba from Tuesday's six-hour operation - his fourth since he was diagnosed with cancer in the pelvic region in mid-2011.
Officials say Chavez has regained full consciousness, is giving instructions from his bed, and was following Sunday's vote closely. "The commander-president continues to stabilize. The tendency remains positive," his son-in-law Jorge Arreaza, who serves as science and technology minister, said from Havana.
The official updates are shy on details, however, so speculation is rife that Chavez may be in a life-threatening situation in Havana's Cimeq hospital with both a difficult post-operative recovery and a possible spreading of the cancer.
Chavez, 58, is due to start a new term on Jan. 10, but has named Vice President Nicolas Maduro as his preferred successor should he be incapacitated. That would trigger a new presidential poll within 30 days.
Chavez's illness has led to an outpouring of emotion including Catholic masses, prayers and vigils round the country.
Maduro has wept in public, state media are replaying images of Chavez round-the-clock, and candidates allied with Chavez held closing rallies simply replaying the president's words.
The sympathy factor could benefit Chavez's candidates and offset the disadvantage of losing his charismatic presence on the campaign trail in advance.
"Without wishing to be triumphalist, we have big chances of winning the 23 governorships and that is the biggest support we can give Chavez," said his brother Adan Chavez, who is seeking re-election in their home state of Barinas.
Still smarting from defeat in October, the opposition hopes voters focus on grassroots issues and punish the government for power outages, pot-hole riddled roads, corruption scandals, violent crime and runaway inflation.
"You can't achieve your dreams if you don't participate," Capriles said as he cast his ballot.
"From my heart, I exhort you to vote."
Though widely expected to retain his seat in Miranda, Capriles faces a well-financed challenge from senior Chavez ally Jaua. If he defeats Capriles, it would leave the opposition in disarray and possibly spark in-fighting over who would be its next presidential candidate.
Two other opposition governors, Pablo Perez and Henri Falcon, are obvious possibilities. But first they too must retain their posts to maintain credibility, and they do not have the national recognition Capriles achieved during his unsuccessful run for the presidency in October.
Despite losing, he won the opposition's largest share - 6.5 million votes, or 45 percent - against Chavez, and impressed Venezuelans with his energetic style, visits to the remotest corners of the country and attention to day-to-day issues.
Still, "in the unlikely event that Capriles loses, he would probably have no chance of running for the presidency again," political risk consultancy Eurasia Group said.
To follow us on Twitter: @ReutersVzla