* Government candidates paint the nation red in state polls
* Capriles holds his seat, flies flag for opposition
* Attention returns to Chavez's condition in Cuba
CARACAS, Dec 17 (Reuters) - Hugo Chavez's supporters
dedicated their dominant regional election win to the absent
Venezuelan president and turned attention back on Monday to his
fight to recover from cancer surgery in Cuba.
Helped by sympathy for Chavez, the ruling Socialist Party
swept the board in Sunday's vote, winning 20 out of 23 state
governorships in the South American OPEC nation.
"That was the people's present for their commander, painting
the country red," said the party's national election coordinator
Government candidates slashed the opposition's control of
seven states to just three - but some good news for the
opposition came from Miranda, where its standard-bearer,
Henrique Capriles, held on to his seat.
That left Capriles, a 40-year-old career politician and
lawyer by training, as the opposition's clear
candidate-in-waiting should Chavez have to step down and a new
election be called.
Venezuela's highly traded global bonds predictably slipped
in price on Monday, given investors' aversion to any good news
for Chavez and hopes for a more market-friendly government.
In early trade on Monday, Venezuela's sovereign debt was off
2 .2 percent a ccording to JP Morgan's tracker, while
the benchmark 2027 bond was down 2.4 pct.
Though celebrating his Miranda win, Capriles acknowledged
that the overall national results were bad for the opposition.
He accused the government of abusing state resources and
exploiting emotions over Chavez's health during the campaign.
"We Venezuelans pray for the president's health, but he is
in Cuba and Venezuela's problems need answers," Capriles added,
criticizing high crime and jobless rates.
NEW PRESIDENTIAL POLL?
In office since 1999, Chavez is due to start a new term on
Jan. 10 after beating Capriles at October's presidential vote.
But he has named a successor, Vice President Nicolas Maduro,
in case he is incapacitated, a scenario that would trigger a new
poll within 30 days in the nation of 29 million people.
Though past surveys have shown Capriles to be more popular
than any other senior officials, Chavez's personal blessing for
Maduro could transform the situation by firing up supporters who
would view him as a proxy for their leader.
"Should there be a presidential vote soon, there is no doubt
Capriles is favorite to represent the opposition, but he has a
tough challenge," local pollster Luis Vicente Leon said.
Capriles avoided talk of a new election , but did forecast
change after Sunday's victory. "The moment will come, we are
close. .. . The change is near, you can feel it in the air."
Chavez has not been seen or heard from since before leaving
for Cuba to undergo a six-hour operation last Tuesday, his
fourth for a cancer that was initially diagnosed in his pelvic
region in mid-2011.
Officials say initial complications have been surpassed, and
that Chavez is slowly recovering, able to speak and give orders.
Yet they have given few medical details, so speculation is
rife that the surgery may have left him in a grave condition and
that the cancer could have spread.
Former Cuban leader Fidel Castro, who has been battling
health problems himself in recent years, has been at his friend
and protege's bedside, presumably at Havana's Cimeq hospital.
Sunday's election illustrated the continuing popularity of
Chavez, who is adored by many poor Venezuelans for his humble
roots and oil-fueled welfare programs, though denounced as a
dangerous autocrat by opponents.
Though many Venezuelans complain loudly about a litany of
daily problems, from power cuts and potholes to murder rates and
kickbacks, the power of Chavez's personality once again appeared
to trump those concerns.
"There was a clear surge in sympathy votes," said Siobhan
Morden, New York-based Jefferies & Co.'s managing director,
adding that Capriles' win by just four percentage points was not
an "ideal" platform for a potential challenge against Maduro.
Half of the ruling Socialist Party's winning candidates on
Sunday were former military men, in what the opposition calls a
dangerous militarization of Venezuela's civil structures.
Chavez's passionate supporters struggle to contemplate a
possible end to his rule, but many say they would simply follow
his instructions and vote for Maduro - should it come to that.
"Whether he is here or not, the (revolutionary) process is
not going to be stopped," said Caracas resident Alfredo Lopez,
discussing politics in the capital's historic Bolivar Square.
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