DILI, East Timor - Voters in East Timor began casting ballots yesterday to elect their first president, as the former Indonesian territory prepares for independence.

Preliminary reports showed that more than 86 percent of the 440,000 eligible voters cast ballots, chief electoral officer Carlos Valenzuela said.

Former resistance leader Xanana Gusmao is the overwhelming favorite to win the ballot, seen as the culmination of a quarter-century struggle for nationhood. The tiny territory split from Indonesia in August 1999 after a U.N.-organized referendum.

Gusmao's only opponent, Francisco Xavier do Amaral, said he was resigned to coming in second. The two men embraced and linked arms as they walked into the same polling station in the capital shortly after voting began. Dozens of onlookers applauded after they voted.

Gusmao, 55, was accompanied by his Australian-born wife, Kirsty Sword-Gusmao, and their baby son, Alexander.

Only one minor violation was reported at the 282 polling centers set up throughout the country, Valenzuela said. Official results will be announced Wednesday, but initial results should be available by today evening.

"Xanana was my choice," said Marcos Soares, a 26-year-old student chatting with friends outside the town's Roman Catholic Church. "He fought for the people of East Timor and never gave up."

More than 2,000 foreign and local monitors observed yesterday's ballot.

On May 20, when the transitional U.N. administration hands over to the local government, East Timor will officially become the first new country of the new millennium.

Some analysts warn that a long-standing rift between Gusmao and the ruling Fretilin party could cause political instability after independence. Gusmao angered some Fretilin legislators by refusing to represent the party, which also campaigned for independence, in the elections.

The world body has been overseeing East Timor since its independence vote in 1999. After that vote, vengeful Indonesian troops and pro-Jakarta militiamen went on a rampage and killed hundreds of people, destroying much of the country and forcing 260,000 refugees into Indonesian-held West Timor. The violence only stopped when international peacekeepers arrived a month later.

Voting ended yesterday at 4 p.m. local time, or 3 a.m. EDT.

More than 2,000 foreign and local monitors observed the ballot.

Do Amaral served as president for nine days after Portuguese colonial rule collapsed in 1975 and before Indonesia invaded on Dec. 7, 1975. He has made it clear he is only running to provide the 444,000 registered voters with a choice.

Gusmao for years led East Timor's guerrilla army against Indonesia's occupation forces. He was captured in 1992 and jailed for seven years.

He has pledged that his priority will be economic growth.

East Timor is one of the poorest nations in Southeast Asia. Outside the capital, Dili, there is little infrastructure, and most of the country's 800,000 people live in abject poverty.

Offshore oil and gas reserves are now being tapped with the help of U.S. and Australian companies. National leaders predict that tourism, agriculture and coffee exports will provide further catalysts for new investment and growth.