Leading opposition party American Popular Revolutionary Alliance (APRA) won 11 regional leadership seats, while independent candidates secured 13, according to a partial count late from electoral agency ONPE.

Toledo's party, Peru Posible, walked away with one seat in the vote to select 25 regional government heads and more than 1,800 mayors.

Luis Castaneda, candidate for the center-right Unidad Nacional party, clinched the key mayorship of Lima, upsetting Alberto Andrade's shot for a second reelection.

"(Peru Posible) is definitely weakened," said political analyst Ernesto Velit. "If the government gets the message that people want power shared with other parties, it will be easier to govern. If it turns its back, there will be problems."

The pledge to mete out power in a nation nearly the size of Alaska -- boasting thick jungles,, snowcapped peaks and vast deserts -- to help far-flung regions overcome poverty has been a cornerstone of Toledo's governing plan.

"For the first time in our history, we are selecting regional authorities ... and taking a fundamental step forward in state reform," Toledo told reporters Sunday.

But predicting defeat for Toledo in his first electoral test since he took office in July 2001, analysts warned that Toledo's ability to rule could be sapped as Lima shares powers with regional rivals as never before.

Toledo's popularity has slid to nearly 20 percent as many in this poor nation, where 54 percent of people live on $1.25 or less a day, say he has yet to deliver on campaign pledges.

"What (the vote) reflects is that people want a change ... and they want authorities who can stand up ... to the president's policies," said Edgar Vasquez, economic analyst at Maximixe private consultancy.

REGION PLAN COULD BE CHANGED

APRA's leader, former President Alan Garcia, said Peruvians had chosen candidates who appealed to them at a time of economic crisis. "The entire country is demanding ... that the government reorient its activities ... devote more energy to revitalizing farms and industry and be more socially sensitive when it comes to employment," he told reporters.

Politicians have clashed on what kind of powers new regional leaders should have, but all agree the task must be shouldered. Some 53 percent of Peru's gross domestic product comes from the seaside capital Lima, home to around a third of the 27 million population, while many in isolated provinces scrape out a living through subsistence agriculture.

"Peru's biggest structural problem is that production is concentrated in big cities and especially Lima. ... We have given the country a (regional) structure ... and we have also submitted complementary regulations to fill in gaps in that structure," Prime Minister Luis Solari told CPN radio.

After criticizing a draft plan outlining the powers of new regional governments passed by Congress last week, Toledo reversed track Saturday when he signed that plan into law.

But he also submitted a draft law to Congress -- which Solari said would be approved before the regional leaders take office on Jan. 1 -- designed to make sure the new regional scheme is friendlier to the central government's wishes.

Some economists worry that doling out power could make it harder for Toledo to stick to promises of tight fiscal discipline and could deter much-needed foreign investment as investors shy away from doing business directly with regions.

But Economy Minister Javier Silva Ruete sought to ease those fears Saturday, saying the government's proposed modifications would guarantee Lima the power to intervene in regions in moments of economic crisis.

"The country must maintain economic stability and we've seen what kind of good results (stability) can bring ... and so we've included a clause ... so the executive can step in with emergency decrees in irregular situations," he said.