By Natalia A. Ramos Miranda and Fabian Cambero
SANTIAGO (Reuters) - Chile's moderate right made gains in regional elections on Sunday while President Gabriel Boric's coalition avoided crushing defeat, pointing to a return to less polarized politics ahead of the 2025 presidential election.
"These elections have a bittersweet side for all sectors. There is no one that can claim overwhelming victories in the overall picture," Boric said in a speech on Sunday night.
Analysts said the less divisive outcome was also a good sign for the market.
"A distribution of votes similar to that before the social unrest (in 2019) would be rewarded by local and international investors in the stock market and exchange rate," Scotiabank Chile chief economist Jorge Selaive said.
Chile was torn by political extremes after widespread protests against inequality in 2019 led to the leftist Boric's rise to power and the election of a committee of predominantly leftists and independents to draft a new constitution.
Voters widely rejected that constitutional proposal and then rebuffed a proposal from an elected far-right committee.
Sunday's results increased the number of mayors for the center-right Chile Vamos, boosting the profile of Evelyn Matthei, an outgoing mayor and presidential contender.
"The presidential race begins now and she will obviously be the main figure," said political analyst Kenneth Bunker.
Boric has suffered from low poll numbers and the government faces an ongoing scandal after the head of its security forces stepped down amid a sexual assault inquiry, but did not suffer a crushing regional election defeat forecast by some analysts.
Consecutive re-election is prohibited in the South American country and the governing coalition has yet to present any presidential frontrunners.
Chile's far-right Republicans made some gains at the municipal level, which Bunker classified as a loss for the government, but University of Valparaiso analyst Guillermo Holzmann said the party fell short of expectations.
"They were convinced that they were going to sweep away," Holzmann said, due to their promise of more security, the top issue for voters.
Most governors failed to win outright and will face a runoff on Nov. 24 that Holzmann said would also "shed light" on the presidential election race.
(Report by Natalia Ramos and Fabian Cambero; Editing by Alexander Villegas and Mark Heinrich)