(Updates vote tally, adds analyst, Larreta comment; byline)
By Jorge Otaola
BUENOS AIRES, July 5 (Reuters) - Argentina’s business-friendly PRO party won Sunday’s mayoral election in the capital Buenos Aires by 20 percentage points, but failed to capture enough votes to avoid a run-off with the No. 2 contender later this month, official returns showed.
With 91.4 percent of the vote counted Horacio Rodríguez Larreta, chief of staff to outgoing mayor and presidential candidate Mauricio Macri, won 45.6 percent of ballots cast.
He needed to break the 50-percent mark to avoid a second round of voting, which will take place July 19.
Still, Larreta’s relatively strong showing was positive for Macri, who will have to carry the city by a wide margin if he is to win the presidency in the October general election. Buenos Aires accounts for about 8 percent of Argentina’s national vote.
“I’d like thank the leader of this team, Mauricio Macri, who we are all sure will be the next president,” Larreta told his supporters in a televised speech.
In second place was Martin Lousteau with 25.6 percent of the vote. The former economy minister represents the ECO party, which is also opposed to outgoing President Cristina Fernandez.
In third place was Mariano Recalde, who heads state-controlled airline Aerolineas Argentinas and represents Fernandez’s Front for Victory party. He got 21.8 percent.
“If there’s a loser here, it’s the Front for Victory, which didn’t even make it to the run-off,” said Ignacio Labaqui, who analyses Argentina for Medley Global Advisors.
Fernandez is constitutionally barred from seeking a third consecutive term in October. For president she has endorsed Buenos Aires Governor Daniel Scioli, who is running several points ahead of Macri in the opinion polls.
Fernandez, widely admired for her political skills but faulted by big business for imposing a web of currency and trade controls that have hurt the economy, may run for president again in 2019.
She backs a slate of congressional candidates in the October general election led by Economy Minister Axel Kicillof and her son, Maximo Kirchner, who heads Fernandez’s “Campora” youth activist organization.
Macri vows he will immediately remove controls and open the economy to attract investment. Scioli also has a more orthodox approach to policy than Fernandez. But any attempts at policy reform could be complicated by the Front for Victory, which is expected to keep control of Congress. (Writing by Hugh Bronstein; Editing by Richard Chang and Eric Walsh)