* Horacio Cartes leads Colorado Party back to power
* Seen defeating candidate of ruling center-right Liberal Party
By Daniela Desantis and Hilary Burke
ASUNCION, April 21 Millionaire businessman Horacio Cartes of the powerful, center-right Colorado Party appeared to be heading to victory in Paraguay's presidential election on Sunday, exit polls and partial official results showed.
Thousands of Colorado Party supporters wearing red shirts and scarves honked their horns and blasted music in the capital Asuncion, celebrating the party's likely return to power after its 60-year reign was interrupted in 2008.
Cartes, 56, is a political novice who never even voted before joining the Colorado Party four years ago. He has vowed to reform the party, which has a long history of corruption.
If Cartes' victory is confirmed, Paraguay will have a right-leaning government, bucking the trend in South America where leftists have made steady gains in recent years. Only Colombia and Chile are ruled by conservatives.
With 54 percent of polling stations reporting, Cartes had 46.0 percent of votes while his main rival, Efrain Alegre of the ruling center-right Liberal Party, had 36.9 percent.
Three exit polls published by local media indicated Cartes had won the balloting with a lead over Alegre ranging from 6.5 percentage points to nearly 21 points.
Alegre, 50, is a lawyer and career politician. His Liberal Party took over the presidency after leftist President Fernando Lugo was impeached last June.
Congress ousted Lugo, a leftist and former Roman Catholic bishop, after finding him guilty of mishandling a botched land eviction in which 17 police officers and peasant farmers were killed. Some of Paraguay's neighbors likened the two-day trial to a coup and imposed diplomatic sanctions on the South American nation.
"There was a coup (against Lugo) because he was the only person capable of defeating the Colorado Party after 60 years. And he will be the only one to have done it in another 100 years," said Fernando Franco, 38, who works as a hospital security guard. "The Colorados won't be defeated again."
Nearly 40 percent of Paraguay's 6.6 million people are poor. The landlocked country relies on soybean and beef exports, but it is also notorious for contraband trade and illicit financing.
One of Paraguay's wealthiest men, Cartes primarily made his fortune in the financial and tobacco industries. Rivals have tried to link him to drug running and money laundering, but he has never been charged with those crimes.
"The accusations made during this campaign have no truth to them, and personally I am very serene," the typically brash and outspoken Cartes told reporters early on Sunday.
Alegre, a more somber politician, led corruption probes in Congress. But his reputation as an honest administrator was undermined by an investigation into whether he misappropriated state funds while serving as Lugo's public works minister.
"My leadership model is different from the traditional one. My project represents a 'decent Paraguay' versus the 'Paraguay of the mafias,'" Alegre told Reuters in a recent interview.
Polls were open from 7 a.m. to 4 p.m. (1100 to 2000 GMT) and international observers said they had received no complaints of fraud.
There is no second round of balloting so the presidential candidate who captures the most votes wins. Voters also elected local authorities and members of Congress.
Paraguay's current president, Federico Franco, is barred by the constitution from running for re-election even though he is just serving out what remained of Lugo's five-year term. He will hand over the presidency in August.