By Orhan Coskun, Ece Toksabay and Ali Kucukgocmen
ANKARA (Reuters) -Turkey&nbsp;headed for a&nbsp;runoff&nbsp;vote after President Tayyip&nbsp;Erdogan&nbsp;led over his opposition rival Kemal Kilicdaroglu in Sunday's&nbsp;election&nbsp;but fell short of an outright majority to extend his 20-year rule of the NATO-member country.
Neither&nbsp;Erdogan&nbsp;nor Kilicdaroglu cleared the 50% threshold needed to avoid a second round, to be held on May 28, in an&nbsp;election&nbsp;seen as a verdict on&nbsp;Erdogan's increasingly authoritarian path.
The presidential vote will decide not only who leads&nbsp;Turkey&nbsp;but also whether it reverts to a more secular, democratic path, how it will handle its severe cost of living crisis, and manage key relations with Russia, the Middle East and the West.
Kilicdaroglu, who said he would prevail in the&nbsp;runoff, urged his supporters to be patient and accused&nbsp;Erdogan's party of interfering with the counting and reporting of results.
But&nbsp;Erdogan&nbsp;performed better than pre-election&nbsp;polls had predicted, and he appeared in a confident and combative mood as he addressed his supporters.
"We are already ahead of our closest rival by 2.6 million votes. We expect this figure to increase with official results,"&nbsp;Erdogan&nbsp;said.
With almost 97% of ballot boxes counted,&nbsp;Erdogan&nbsp;led with 49.39% of votes and Kilicdaroglu had 44.92%, according to state-owned news agency Anadolu.&nbsp;Turkey's High&nbsp;Election&nbsp;Board gave&nbsp;Erdogan&nbsp;49.49% with 91.93% of ballot boxes counted.
Thousands of&nbsp;Erdogan&nbsp;voters converged on the party's headquarters in Ankara, blasting party songs from loudspeakers and waving flags. Some danced in the street.
&nbsp;&nbsp;&nbsp; "We know it is not exactly a celebration yet but we hope we will soon celebrate his victory.&nbsp;Erdogan&nbsp;is the best leader we had for this country and we love him," said Yalcin Yildrim, 39, who owns a textile factory.
ERDOGAN&nbsp;HAS EDGE
The results reflected deep polarization in a country at a political crossroads. The vote was set to hand&nbsp;Erdogan's ruling alliance a majority in parliament, giving him a potential edge heading into the&nbsp;runoff.
Opinion polls before the&nbsp;election&nbsp;had pointed to a very tight race but gave Kilicdaroglu, who heads a six-party alliance, a slight lead. Two polls on Friday showed him above the 50% threshold.
The country of 85 million people - already struggling with soaring inflation - now&nbsp;faces&nbsp;two weeks of uncertainty that could rattle markets, with analysts expecting gyrations in the local currency and stock market.
"The next two weeks will probably be the longest two weeks in&nbsp;Turkey's history and a lot will happen. I would expect a significant crash in the Istanbul stock exchange and lots of fluctuations in the currency," said Hakan Akbas, managing director of Strategic Advisory Services, a consultancy.
"Erdogan&nbsp;will have an advantage in a second vote after his alliance did far better than the opposition's alliance," he added.
A third nationalist presidential candidate, Sinan Ogan, stood at 5.3% of the vote. He could be a "kingmaker" in the&nbsp;runoff&nbsp;depending on which candidate he endorses, analysts said.
The opposition said&nbsp;Erdogan's party was delaying full results from emerging by lodging objections, while authorities were publishing results in an order that artificially boosted&nbsp;Erdogan's tally.
Kilicdaroglu, in an earlier appearance, said that&nbsp;Erdogan's party was "destroying the will of&nbsp;Turkey" by objecting to the counts of more than 1,000 ballot boxes. "You cannot prevent what will happen with objections. We will never let this become a fait accompli," he said.
But the mood at the opposition party's headquarters, where Kilicdaroglu expected victory, was subdued as the votes were counted. His supporters waved flags of&nbsp;Turkey's founder Mustafa Kemal Ataturk and beat drums.
KEY PUTIN ALLY
The choice of&nbsp;Turkey's next president is one of the most consequential political decisions in the country's 100-year history and will reverberate well beyond&nbsp;Turkey's borders.
A victory for&nbsp;Erdogan, one of President Vladimir Putin's most important allies, will likely cheer the Kremlin but unnerve the Biden administration, as well as many European and Middle Eastern leaders who had troubled relations with&nbsp;Erdogan.
Turkey's longest-serving leader has turned the NATO&nbsp;member and Europe's second-largest country into a global player, modernised it through megaprojects such as new bridges and airports and built an arms industry sought by foreign states.
But his volatile economic policy of low interest rates, which set off a spiralling cost of living crisis and inflation, left him prey to voters' anger. His government's slow response to a devastating earthquake in southeast&nbsp;Turkey&nbsp;that killed 50,000 people earlier this year added to voters' dismay.
PARLIAMENTARY MAJORITY
Kilicdaroglu has pledged to revive democracy after years of state repression, return to orthodox economic policies, empower institutions that lost autonomy under&nbsp;Erdogan&nbsp;and rebuild frail ties with the West.
Thousands of political prisoners and activists could be released if the opposition prevails.
Critics fear&nbsp;Erdogan&nbsp;will govern ever more autocratically if he wins another term. The 69-year-old president, a veteran of a dozen&nbsp;election&nbsp;victories, says he respects democracy.
In the parliamentary vote, the People's Alliance of&nbsp;Erdogan's Islamist-rooted AKP, the nationalist MHP and others fared better than expected and were headed for a majority.
(Reporting by Mehmet Emin Caliskan, Bulent Usta, Ezgi Erkoyun, Can Sezer, Deniz Uyar and Jonathan Spicer; Writing by Tom Perry, Daren Butler and Alexandra Hudson; Editing by Jonathan Spicer, Cynthia Osterman and Stephen Coates)

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Turkey faces runoff election with Erdogan leading