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Portuguese parties wrap up campaign ahead of Sunday's election

Social Democratic (PSD) and Democratic Aliance (AD) leader Luis Montenegro campaign ahead of the snap elections

By Catarina Demony and David Latona

LISBON (Reuters) - Surrounded by upbeat supporters, Portuguese party leaders braved the pouring rain on Friday to wrap up two weeks of campaigning for what is set to be a tight election that could end eight years of Socialist rule.

Sunday's race, two years ahead of schedule, was called when Socialist premier Antonio Costa resigned in November over an investigation into alleged illegalities in his government's handling of large investment projects.

The election is unlikely to produce a clear winner, opinion polls show, and far-right party Chega could play a decisive role in subsequent coalition talks just as the country prepares to celebrate 50 years since the fall of a fascist dictatorship.

In the last election in January 2022, Costa's Socialists (PS) won an absolute majority with over 41% of the vote. The government's implosion has brought their ratings in polls below 30%, just behind right-wing coalition, the Democratic Alliance (AD).

Leader of AD Luis Montenegro, from main opposition Social Democrats (PSD), met hundreds of lively supporters early on Friday outside a local market in one of Lisbon's neighbourhoods and walked down an avenue as some drivers honked their horns in a show of encouragement.

"We have to turn this around," said AD supporter Noel Menezes, a 49-year-old disappointed at the policies PS has implemented since it came to power in 2015. "Our hope is one: victory... and we will win."

Under Socialist leadership, Portugal's economy has grown at solid annual rates above 2%, except for the pandemic-induced slump of 2020. But it remains one of Western Europe's poorest nations, where many struggle to make ends meet due to low salaries and a housing crisis.

Montenegro has ruled out any agreements with Chega and AD supporter Raquel Lourenco, a 26-year-old lawyer, said she was confident he would keep his word: "It is something that will not happen...I'm sure of that."

But, at the PS rally later on Friday, supporter Luisa Patricio, 66, said she remembered life before democracy and that Socialist leader Pedro Nuno Santos was key to stop the far-right from growing.

"We cannot allow the right and the far-right to take away the few rights we still have," Patricio said as she held an umbrella to protect herself from the downpour.

Socialist supporter Carla Moita echoed Patricio's worries: "Extremism and populism are a real concern."

At the end of the rally, Nuno Santos took to a tiny stage and thanked hundreds of supporters for braving the weather. He promised to work until the last minute to win.

Shortly after the PS rally ended, a smaller number of Chega supporters walked down the same street in Baixa Chiado, one of Lisbon's most iconic neighbourhoods. Polls indicate Chega, led by former sports commentator Andre Ventura, could win between 15% and 20%.

Ventura, who on Friday wore a Portuguese flag around his neck, is known for his anti-immigration rhetoric and promises to unseat traditional parties, stamp out corruption and to ease the tax burden.

"It has been 50 years of PS and PSD (rule)," said 56-year-old Antonio Horta. "That's enough."

(Reporting by Catarina Demony, David Latona, Elena Rodriguez, Miguel Pereira and Michael Gore; Editing by Marguerita Choy)