LONDON, Nov 17 (Reuters) - The outcome of the

first-round vote in Chile's presidential election should be

positive for the peso, stocks and bonds, analysts said on

Monday, expecting this could potentially pave the way for more

market-friendly initiatives.

Following the vote on Sunday, far-right candidate Jose

Antonio Kast is favoured to clinch victory in the runoff on

December 14 despite lagging slightly behind governing coalition

candidate Jeannette Jara.

The combined vote share of all right-leaning candidates

surpassing 50% made it likely Kast would consolidate votes in

the second round, positioning him for a decisive victory, said

Thierry Larose, portfolio manager at Vontobel.

"This outcome is seen as moderately bullish for Chilean

assets," Larose said in emailed comments. "A likely Kast

presidency, combined with a right-leaning but fragmented

Congress, is expected to support local assets such as Chilean

bonds and the peso."

Chile's peso has some catching up to do, having strengthened

just over 7% since the start of the year against a dollar that

has softened 9% against currencies of major U.S. trading

partners. Chile's peso has also underperformed regional peers

from Brazil to Colombia or Mexico, whose currencies have

strengthened 14% or more since the start of the year.

Law-and-order issues and immigration have dominated Chile's

electoral agenda, marking a sea change from the wave of

left-wing optimism and hopes of drafting a new constitution that

brought current President Gabriel Boric to power. Boric isn't

allowed to run for reelection.

The runoff pits two ideological extremes against each other.

An eventual win for Kast would put in place an administration

further to the right than any other since the Pinochet

dictatorship.

Diego Celedon at JPMorgan pointed to a stronger showing

overall for the right-wing lists.

"This lowers the execution risk of some of the pro-market

initiatives presented by the right-wing candidate (in case he

wins the second round), which in our view generates support for

equities," Celedon said.

MSCI's Chile equity benchmark has risen more than 46% since

the start of the year, beating a near-29% rally in the broader

MSCI emerging market equity index.

"For markets, a Kast victory offers the prospects of fiscal

consolidation and a renewed focus on attracting much-needed

investments and boosting Chile's lacklustre growth," said Nafez

Zouk, EM sovereign debt analyst at Aviva Investors.

"Markets should find comfort in the fact that the political

landscape should permit a move towards more centrist macro

policy-making, with the debate amongst the candidates having

been about how much, not whether, to consolidate fiscal

accounts."