UPDATE 4-Russian party to win Latvia vote, stake claim

* Latvian election called over corruption fight

* Russian minority party leads polls, hopes for say in govt

* Current prime minister wants to stay on euro course (Adds results, quotes from Harmony Centre leader)

By Nerijus Adomaitis and Patrick Lannin

RIGA, Sept 17 (Reuters) - A centre-left party backed by Latvia's Russian minority was set to win a snap election called to fight the power of business oligarchs, staking a claim to be involved in government talks for the first time in post-Soviet history.

Two centre-right Latvian parties, seen as natural allies of each other, were set together to get more than the Russian minority Harmony Centre in the Saturday election, but Harmony leader Nils Usakov, 35, said his party could not be ignored.

"I am convinced that Latvian politicians ... will be able to form a coalition where the interests of all voters are represented," he said on LNT commercial television.

Results from 725 of 1,027 polling districts showed Harmony Centre, which has portrayed itself as the sole centre-left option, on 31.7 percent of the vote.

About a third of the 2.2 million population are Russian speakers and just over half of them have the right to vote.

The country has been split roughly along ethnic lines since the fall of the Soviet Union, but Harmony aimed to draw ethnic Latvian voters in the aftermath of a deep economic crisis.

The results showed a party led by former president Valdis Zatlers, whose decision to dissolve parliament forced the election, would win 19.7 percent of the vote and the Unity Party of Prime Minister Valdis Dombrovskis was on 17.3 percent.

Dombrovskis, who backs further fiscal austerity and wants to take Latvia into the euro zone in 2014, said on LNT that he would start a first round of talks with the Zatlers party on Sunday as his first preference.

HISTORY PROBLEMS

Latvian parties have had difficulty accepting Harmony over issues of historical interpretation, like whether the 50 years of Soviet rule was an occupation.

Usakov was reported in Latvian media to have said during an international conference on Friday that Latvia was occupied.

On LNT, he said he was not "allergic" to the word occupation, but did not want people to be labelled as "occupiers", a word some ethnic Latvians use for Russophones who arrived in their country during Soviet rule.

Analysts have said Dombrovskis and Zatlers could turn to a nationalist party to gain the necessary majority in the 100-seat parliament. The initial results showed the nationalist party would win about 12 percent of votes.

Harmony was dogged by suspicions of Russian influence due to ties with the United Russia Party of Prime Minister Vladimir Putin. Its economic policy of more social spending and delaying euro adoption was also at odds with the main Latvian parties.

Zatlers triggered the election by ordering the dissolution of parliament after lawmakers refused permission for prosecutors to search a flat owned by a businessman, who is also a member of parliament and one of three men widely labelled as an oligarch.

Opponents say the three oligarchs have used their wealth to influence politics and favour their own business interests or those of their associates. The men have denied any wrongdoing.

Latvians overwhelmingly backed Zatlers's decision in a July referendum. By then Zatlers had failed to be re-elected as president by parliament, and he formed his own party.

Two of the three oligarchs are set to lose their places in parliament, the exit polls showed, while a farmers' party spearheaded by the third would have its representation cut to 10-11 percent from 19 percent.

Dombrovskis, 40, led Latvia through a package of public sector pay cuts, which saw some salaries reduced by 50 percent, and higher taxes after a 2008 crisis forced the country to take a 7.5 billion euro international bailout. His Unity party won the last election in October 2010 with 33 seats.

Dombrovskis says his policies have restored international confidence in Latvia and brought about a recovery from an 18 percent drop in economic output in 2009. $1 = 0.725 Euros) (Editing by Peter Graff)