* Investor favourite beats anti-austerity opponent
* Anastasiades took 57.5 pct, rival Malas took 42.5 pct
* Cyprus in desperate need of bailout deal with EU/IMF
By Michele Kambas and Deepa Babington
NICOSIA, Feb 24 Cypriot conservative leader Nicos Anastasiades won an overwhelming victory in a presidential run-off election on Sunday, promising to quickly finalise a financial rescue to stave off the island's bankruptcy.
Eight months of inconclusive talks on a bailout package have turned tiny Cyprus into a big headache for the euro zone, triggering fears of a financial collapse which would reignite the bloc's debt crisis.
Anastasiades immediately pledged to hammer out a quick deal with foreign lenders and bring Cyprus closer to Europe, in a shift from the policies of the outgoing Communist government that first sought aid from Russia before turning to the EU.
"We want Europe on our side. We will be absolutely consistent and meet our promises. Cyprus belongs to Europe," Anastasiades told jubilant supporters waving Greek flags and blowing horns. "We will restore the credibility of Cyprus in Europe and internationally. I promise you."
A sea of Greek flags far outnumbered the few Cypriot flags at an indoor stadium where Anastasiades - whose party is proud of its members' ethnic Greek identity - spoke.
The 66-year-old lawyer, known for his no-nonsense style and hot temper, took 57.5 percent of the vote, 15 points ahead of his anti-austerity Communist-backed rival Stavros Malas.
The decisive outcome showed a clear mandate from Cypriots for an aggressive, pro-bailout approach to resolving the nation's financial quagmire, despite growing despondency over austerity measures that will have to accompany any such rescue.
"It's a triumph," said Stefanos Stefanou, a 62-year-old pensioner as he stood outside Anastasiades's campaign offices. "I won't have the fear of losing my pension and benefits now, along with what we earned after working for 40 years."
Financial markets had been hoping for an Anastasiades victory to speed up a joint rescue by the European Union and International Monetary Fund before the island runs out of cash and derails fragile confidence returning to the euro zone.
Virtually all rescue options - from a bailout loan to a debt writedown or slapping losses on bank depositors - are proving unpalatable because they push Cypriot debt to unmanageable levels or risk hurting investor sentiment elsewhere in the bloc.
German misgivings about the nation's commitment to fighting money-laundering and strong financial ties with Russia have further complicated the negotiations.
Anastasiades, a heavy smoker known for his no-nonsense style and who counts fellow conservative German Chancellor Angela Merkel among his contacts, has stressed his pro-European credentials stand him in better stead to seal a deal than the outgoing president, who is the EU's last Communist leader.
In a clear shift with the policies of his predecessor, Anastasiades said one of his first tasks would be to apply for Cypriot membership of the NATO-affiliated Partnership for Peace.
Cyprus's Communist government strongly objected to any NATO links, holding it responsible for what it says was a conspiracy to split the island in 1974.
"We need a government with weight that can talk to (EU) partners, that is cooperative, that can be heard and do what it pledges to do," Christopher Pissarides, a Cypriot who won the Nobel prize in economics in 2010 told Reuters.
"We hadn't been doing this until now. The most important thing is to signal our willingness to cooperate (with the EU)."
EU Commission president Jose Manuel Barroso said he spoke to Anastasiades after the victory and assured him that the bloc was committed to helping Cyprus overcoming its problems.
SOUR NATIONAL MOOD
Anastasiades takes the reins of a Mediterranean nation ravaged by its worst economic crisis in four decades, with unemployment at a record high of 15 percent. Pay cuts and tax hikes ahead of a bailout have further soured the national mood.
His most immediate task will be to appoint a finance minister who can convince Europeans to agree a swift bailout. It is likely to be Michael Sarris, a widely respected former World Bank economist who ushered Cyprus into the euro zone in 2008 as finance minister under a centre-left government.
European officials want a bailout agreed by the end of March, ensuring no honeymoon period for the new president, who will be sworn in on Feb. 28 and assume power on March 1.
Talks to rescue Nicosia have dragged on since June, after a Greek sovereign debt restructuring saddled its banks with losses. It is expected to need up to 17 billion euros in aid - about the size of its entire economy.
Anastasiades has suggested the island may even need a bridging loan to tide it over until a rescue is nailed down.
Turnout was lower than expected among the half a million Cypriots eligible to vote, with a 19 percent abstention rate blamed on despondency at the country's grim prospects.
Longstanding anger over the island's 40-year-old division into the Greek-speaking south and Turkish north has been relegated to a distant second behind the country's financial quagmire as an election issue this year.
"Cyprus has to move forward," said Marios, an 18-year-old army conscript who declined to give his last name for fear of violating army rules.
"We were prospering but in the last five years we started going backwards."