By Caroline Stauffer and Jorge Otaola
BUENOS AIRES (Reuters) - Argentina's former leader Cristina Fernandez was tied with President Mauricio Macri's candidate as most results were in from a Senate primary seen as a gauge of Fernandez' chances of staging a populist comeback and ending Macri's reform agenda.
With 95.58 percent of votes in Buenos Aires province - home to nearly 40 percent of Argentina's electorate - counted, the coalition led by Macri's former education minister Esteban Bullrich had 34.19 percent while Fernandez's list had 34.11 percent.
There was never a doubt that Fernandez - who ran unopposed from within her own party - would go on to run for the Senate in the Oct. 22 election but many investors feared a strong showing could weaken Macri and pave the way for her to return to the presidency in 2019.
Argentina's peso had weakened around 9 percent since Fernandez formed a new political party and declared her candidacy on June 24. Fernandez was president from 2007 to 2015 and was indicted for corruption last year.
Traders had priced in a Fernandez win by a margin of around 3 percentage points, according to J.P. Morgan. Local brokerage Portfolio Personal said the market expected her to win by between two and 4 percentage points.
Despite falling far short of that, Fernandez took the stage at a rally at 4 a.m. to claim victory and criticized the pace of the vote count.
"I never imagined I would have to ask pardon to all the Argentines for this embarrassment," she said. "It's an offense to democracy."
No matter how many seats his "Let's Change" coalition picks up in October - when Argentines elect one third of the Senate and half the lower house of Congress - Macri will still lack a majority and must build alliances to pass reforms, but analysts said a defeat for Fernandez would strengthen his negotiating position.
Shortly after taking office in December 2015, Macri lifted currency controls, eliminated export taxes and restrictions on grains, and settled a legal dispute with creditors that paved the way for Argentina's return to global debt markets. He also began cutting subsidies for utilities like gas and electricity in a bid to reduce the country's fiscal deficit.
The moves were praised by investors who were spooked by Fernandez's interventionist policies, but a 2.2 percent economic contraction and inflation above 40 percent last year cut into Argentines' purchasing power.
Booming farm activity and an increase in public works spending have contributed to a nascent economic rebound, but it has not yet been felt in many parts of Buenos Aires province's industrial belt, where Fernandez's message appeals to many.
"Macri made an adjustment that only benefited the millionaires. There's more poverty and more unemployment," said Enrique Greco, 47, a public employee in the province.
Macri's candidate, Bullrich, a little-known politician who made several gaffes in the final weeks of campaigning, was aided by recently improving economic data as well as support from the popular governor of Buenos Aires province, Maria Eugenia Vidal.
"We know you hoped the improvements would come faster," Vidal told voters on Sunday. "This country and this province are profoundly changing into something truly different."
Under Argentina's election system, the winning party in each Senate race gets two of the province's three seats, with the remaining seat going to the second-place finisher.
A second-place finish would thus still grant Fernandez, 64, a Senate seat, which would give immunity from arrest, although not from trial. She dismisses the corruption accusations as politically motivated.
(Additional reporting by Nicolas Misculin, Luc Cohen and Maximiliano Rizzi; Writing by Caroline Stauffer; Editing by Robin Pomeroy)