LISBON - Waving colourful flags and shouting political slogans, hundreds of people took to Lisbon's streets on Friday to support candidates as they wrapped up two weeks of campaigning ahead of Sunday's parliamentary election.

The election, called in November after parliament rejected the government's budget bill, is wide open as the ruling Socialists (PS) continue to lose their lead in opinion polls to the main opposition party, the centre-right Social Democrats (PSD).

Ana Ferreira, 48, brought her young son Miguel to the PS rally in Baixa Chiado, one of Lisbon's most iconic neighbourhoods. Though a win for her party was uncertain, she was hopeful.

"For our own good, (my expectation) is a victory, a very clear victory," Ferreira said. "I want a future for all children, including mine, to be assured. I want public schools for all, health care for all."

Analysts say the election is likely to worsen political volatility and could produce a short-lived government as no party or known alliance is expected to gain a working majority.  

Premier Antonio Costa's centre-left party dropped to 35% support, according to a survey by ISCTE-ICS pollsters for SIC TV and newspaper Expresso published on Friday, from 38% a month ago, while the PSD rose to 33% from 31%.

At a rally on Friday also held at Baixa Chiado, PSD supporters wore the party's orange and expressed optimism.

"I hope we win, and I'm confident... I see people joining forces," Helena Correia, 62, said as she waited for PSD leader Rui Rio to arrive at the rally.

 

'HISTORIC'

The gap between the PS and PSD is smaller than ISCT-ICS poll's 3.1% margin of error, meaning they are in a technical draw. A different poll earlier in the week showed the PSD leading by a narrow margin.  

The tight divide leaves the parties distant from a parliamentary majority, which under the proportional representation system equates to between 42% and 45% of the vote.

Another survey by Catolica pollsters for TV channel RTP, Antena 1 radio and Publico newspaper showed PS at 36%, down from 37% a week ago. The PSD remained steady at 33%.

In the ISCTE-ICS poll, the far-right party Chega, the pro-business Liberal Initiative and the Communist-Greens alliance CDU saw support at 6% each, and any of them could become the third-largest force in parliament.

"We are going to win third place, and it's going to be historic," Chega supporter Miguel Santos, 49, said as party leader Andre Ventura departed a rally in Lisbon.

ISCTE-ICE surveyed 1,003 people on Jan. 18-24, while Catolica surveyed 2,192 people on Jan. 19-26, with a margin of error of 2.1%.

(Reporting by Sergio Goncalves, Catarina Demony, Miguel Pereira and Silvio Castellanos in Lisbon; Editing by Andrei Khalip, Angus MacSwan and Cynthia Osterman) ((sergio.goncalves@thomsonreuters.com; +351213509204; Reuters Messaging: sergio.goncalves.reuters.com@reuters.net))