Mexican leftist closes in on presidential front-runner By Mica Rosenberg and Miguel Gutierrez MEXICO CITY (Reuters) - Mexico's leftist presidential candidate Andres Manuel Lopez Obrador has cut the gap on front-runner Enrique Pena Nieto to just four percentage points according to a new poll, raising doubts about the outcome of the July 1 election. The latest voter survey by newspaper Reforma published on Thursday showed support for 2006 runner-up Lopez Obrador at 34 percent, up seven points from a previous poll last month. Pena Nieto, candidate of the opposition Institutional Revolutionary Party (PRI), which ruled Mexico for most of the 20th century, dropped four points to 38 percent, his worst showing since the campaign formally began at the end of March. The turnaround in Pena Nieto's fortunes sent a shiver through markets in Mexico, reflecting uncertainty about how strong the next government would be, and echoing fears that surfaced during Lopez Obrador's tilt for the presidency in 2006. Pena Nieto has held a big lead in most polls, but has come under pressure in the last two weeks with thousands of people taking to Mexico City's streets to protest against him and the PRI. Organizers have called for more marches in coming weeks. "The variations in support reflect a month of campaign that witnessed the mobilization of students for information and against Enrique Pena, and the rise of corruption on the public agenda," Reforma pollster Alejandro Moreno said in the paper. The new Reforma poll was taken between May 24 and 27, after the big protest on May 19. It showed Josefina Vazquez Mota of the conservative National Action Party, or PAN, that has governed Mexico since 2000, dropping six points to 23 percent. The latest survey showed the race to be much closer than other recent polls. One conducted by polling firm Consulta Mitofsky between May 25 and 27 gave Pena Nieto a lead of 17.5 percentage points after stripping out undecided voters Lopez Obrador lost the 2006 election by less than a percentage point and he contested the results, declaring himself the rightful president of Mexico and staging months of disruptive street protests that choked the capital. In this campaign, he has taken a more moderate tone but he had been struggling to win back former supporters who were put off by his refusal to accept defeat in 2006. Lately, though, he has been able to capitalize on the growing youth movement against Pena Nieto and the PRI, whose 71-year rule was tainted by corruption and authoritarianism. "Pena is losing steam," Lopez Obrador said after seeing the poll. He is the candidate of the media, not of the people. Many of the protests against Pena Nieto have also criticized Mexico's largest broadcaster Televisa, with detractors saying it has propped up the telegenic former state governor's campaign. Allegations that Tomas Yarrington, a former PRI governor in northern Mexico, took money from drug gangs, have also dogged Pena Nieto's presidential bid in recent weeks. If the next batch of polls show a similar surge for Lopez Obrador, Mexico will face a tense final month of campaigning. A fiery orator and ex-mayor of Mexico City, Lopez Obrador spooked investors in 2006 with a leftist policy platform that focused on cutting poverty and at times appeared to be anti-business. This time he is pledging to rule for "rich and poor." Even with the new poll showing his surge in support, some analysts are skeptical he can catch Pena Nieto. "I don't think there is any doubt in anyone's mind that Pena Nieto is going to win in the end," said Patricia Berry, an analyst at Mexico City brokerage Intercam. However, others fear that if Pena Nieto is weakened it could hurt his ability to carry out reforms to Mexico's economy. Markets in Mexico, already rattled by the ongoing sovereign debt crisis in Europe, slid on Thursday after the poll cast doubt on victory by market-friendly Pena Nieto. The peso slumped more than 1 percent to a three-year low, while bond prices dropped and the stock market fell 1 percent. The PRI are hoping to win a majority in Mexico's congress and Pena Nieto promised to open up the energy sector to private investment, widen the tax base and liberalize the labor market. "Basically the fear is that Pena Nieto won't get a clear mandate and there won't be reforms," said Pedro Tuesta, an analyst on Latin America for 4Cast in Washington. Lopez Obrador, who opposes the PRI's planned energy reform, has taken a different tack to Pena Nieto on many issues. He plans to raise taxes for foreign mining companies in Mexico and aims to renegotiate the North American Free Trade Agreement. His strongest support is in the center and south of the country, where his message of fighting poverty is popular. The Reforma poll shows Vazquez Mota's hopes of becoming Mexico's first woman president fading. She has been hobbled by infighting in the PAN and a series of mistakes on the campaign trail, slipping back to third in most polls. Support for the PAN also has been hit by the mounting death toll from drug-related violence. President Felipe Calderon launched an army-led offensive against Mexico's powerful cartels shortly after taking office in December 2006 but he has failed to beat them and more than 55,000 people have been killed in brutal turf wars. Calderon is barred by law from seeking re-election and his drug war strategy has been dismissed as a failure by his rivals. For its latest poll, Reforma surveyed 1,515 people with a margin of error of 2.9 percentage points. Additional reporting by Rachel Uranga, Dave Graham, Jean Luis Arce and Ioan Grillo; Editing by Kieran Murray and Anthony Boadle