UPDATE 5-Venezuela opposition leader quits race, backs Capriles

* Withdrawal strengthens opposition frontrunner Capriles
* Lopez had been barred from office by Chavez government
* Opposition primary looms before presidential vote

(Adds analyst comment)
By Diego Ore and Brian Ellsworth
CARACAS, Jan 24 (Reuters) - One of Venezuela's
best-known opposition leaders, Leopoldo Lopez, pulled out of the
presidential race on Tuesday and threw his support behind
coalition frontrunner Henrique Capriles.
A center-left state governor, Capriles is already the
favorite to win the Feb. 12 opposition Democratic Unity
coalition primary and will be further boosted by Lopez's exit.
The opposition's unity candidate will face President Hugo
Chavez in an Oct. 7 presidential vote that may be one of the
South American nation's closest in decades, though the incumbent
is seen having the upper hand thanks to liberal use of state
funds to bolster his popularity and his campaign.
"Unity is being strengthened, hope is being strengthened,
Venezuela is being strengthened," Lopez told a euphoric crowd of
supporters that from time to time broke into chants of "Si se
puede" or "Yes we can."
"Vote for Henrique Capriles and you will be voting for
Leopoldo Lopez," he added, as the men stood together.

The opposition, for years famous for internecine squabbling
that benefited Chavez, now has five candidates vying for the
Democratic Unity presidential ticket.
Capriles leads his fellow opposition aspirants in opinion
polls by 10 to 20 percentage points, and surveys show he is also
the candidate with the best possibilities against Chavez given
his populist style and non-confrontational rhetoric.
But most analysts still see Chavez winning another six years
in office in spite of a cancer diagnosis last year that may
limit his capacity to campaign and complaints among voters about
high crime, lack of housing and a high cost of living.
"As we get closer to the primaries, the opposition
still appears to face strong headwinds in the upcoming electoral
tournament," wrote Boris Segura, a Latin America strategist at
Nomura, in a research note.
"President Chavez still enjoys high popularity levels,
increasing steadily since early 2010," he wrote, adding that
surging public expenditure will strengthen Chavez's hand.
The former soldier has already launched a wave of social
spending programs ranging from houses for homeless families to
monthly stipends for children and senior citizens that are
likely to shore up his popularity and his electoral chances.
In a lackluster event on Monday, opposition candidates
presented a unified plan for government, but the 175-page
document appeared to offer few eye-catching alternatives to
Chavez's popular state-driven socialism.

CHAVEZ MOCKS "BOURGEOIS" RIVALS
A Harvard graduate with Hollywood good looks, Lopez, 40, was
arguably the most-recognized opposition candidate abroad because
of his long and highly publicized legal fight with the Chavez
government after being disqualified from politics in 2008.
The regional Inter-American Court of Human Rights ruled in
his favor last year, then Venezuela's Supreme Court confusingly
decreed he could run for president, but was still barred from
holding office because of a pending graft probe.
He always denied the charges.
"His candidacy has been affected by the Supreme Court's
decision. It's more intelligent to reach agreement than end up
third," local political analyst Luis Vicente Leon told Reuters.
"An alliance between Lopez and Capriles was a natural,
compatible one."
Government leaders were quick to dismiss the agreement as a
throwback to the pre-Chavez political era in which political
leaders were notorious for cutting back-room deals.
Information Minister Andres Izarra described via Twitter the
agreement as "the Country Club pact," in reference to the two
leaders' privileged background.
Chavez has repeatedly mocked the opposition primaries as a
battle between minor figures unworthy of facing him.
"They're all the same, they're all the candidate of the
rancid, radical bourgeoisie. They are the candidate of the
Yankee empire," he railed during his weekly "Hello, President"
program on TV over the weekend.
"They all represent, as (philosopher) Nietzsche said ...
nihilism. They are nothing, we are the fatherland."
Capriles, who has impressed voters as an efficient governor
of Miranda state, exudes a similar confidence to Chavez, as well
as an on-the-street style reminiscent of the Venezuelan
president's first presidential campaign and early days.
The governor often rides a motorbike to work, spends more
time in slums than his office, and has been drawing large crowds
to walkabouts in the provinces as he campaigns for the
opposition ticket.
His campaign has cautiously avoided shrill rhetoric about
abstract issues such as freedom of expression and independence
of state institutions, focusing instead on concrete problems
such as electricity shortages and crime.

(Additional reporting by Andrew Cawthorne and Deisy Buitrago;
Editing by Will Dunham and Kieran Murray)