(Reuters) -&nbsp;East&nbsp;Timor independence hero Xanana Gusm&atilde;o's&nbsp;party&nbsp;was leading with two-thirds of votes counted in a&nbsp;parliamentary&nbsp;election,&nbsp;state&nbsp;media&nbsp;showed on Monday, heralding a possible return to power for the former rebel after nearly a decade in&nbsp;opposition.
Sunday's election, which will pave the way for the winning&nbsp;party&nbsp;or a coalition of parties to appoint the head of government, is a battle for the premiership between Gusm&atilde;o and Mari Alkatiri, another resistance-era figure from the ruling&nbsp;party.
With nearly 70% of ballots counted, Gusm&atilde;o's&nbsp;opposition&nbsp;party, the National Congress for Timorese Reconstruction (CNRT), had about 40% of votes, according to election commission data as broadcast by&nbsp;state&nbsp;media&nbsp;Radio-Televis&atilde;o Timor Leste.
The ruling Revolutionary Front for an Independent Timor-Leste (FRETILIN), which&nbsp;leads&nbsp;a four-party&nbsp;coalition backing the incumbent prime minister Jos&eacute; Maria Vasconcelos, or Taur Matan Ruak, had about 27% of votes.
Fifteen other parties were contesting the&nbsp;poll, though none had more than 10% of votes as of Monday.
Reuters could not independently verify the results.
The election is&nbsp;East&nbsp;Timor's&nbsp;fifth&nbsp;parliamentary&nbsp;poll&nbsp;since it gained full independence in 2002 following decades-long occupation by Indonesia.
Heavily dependant on its fast-depleting oil reserves for revenue, the half-island nation of 1.3 million people has grappled with diversifying its economy and reducing high rates of poverty.
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(Reporting by Stanley Widianto; Editing by Kanupriya Kapoor)

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East Timor's main opposition party leads in parliamentary poll - state media