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UPDATE 2-President favored as Hondurans vote, but critics fear power grab

(Adds Hernandez's remarks, quote from analyst)

TEGUCIGALPA, Nov 26 (Reuters) - Honduras' U.S.-friendly leader looked poised to win a second term as voters cast their ballots in the Central American country on Sunday, eight years after he supported a coup to remove a previous president who flirted with re-election.

President Juan Orlando Hernandez, 49, of the center-right National Party, has lowered a sky-high murder rate, accelerated economic growth and cut the deficit since he took office in 2014, and appears set to benefit from a 2015 Supreme Court decision that overturned a constitutional ban on re-election.

Critics warn that Hernandez, a staunch U.S. ally on fighting drug gangs and migration, is tightening his grip on power, using a pliant Supreme Court and electoral tribunal to clear a path for his re-election bid in one of the Americas' poorest, most violent countries.

"I want to say to all Hondurans that we are building democracy," Hernandez said on Sunday at a news conference in a National Party operations base in Tegucigalpa. He urged his supporters, bedecked in blue and shouting: "Long Live Juan Orlando," to back his candidacy and secure a majority in the 128-seat Congress.

Opposition members say the second-term campaign is illegal and that they will not accept results from an election tribunal they accuse of being co-opted by Hernandez until they conduct their own vote count.

Opinion polls suggest Hernandez, born into a rural family of 17 siblings, will benefit from a splintered opposition and savvy political moves to clinch a historic second term and strengthen his militarized assault on gangs. Voters will also pick lawmakers.

Hernandez had a 15-point lead in a September poll, the last allowed under election rules.

In second place was sports and talent TV show host Salvador Nasralla, who leads a broad left-right coalition called the Opposition Alliance Against the Dictatorship. It includes the Liberty and Refoundation Party, or LIBRE, which is controlled by former President Manuel Zelaya, whom many see as a force behind the bloc.

Hernandez says he will build roads and bridges with public and private money to lure foreign investment, create 600,000 jobs and help lift economic growth to above 6 percent.

In the capital, Tegucigalpa, many are thankful for a lower crime rate and seem willing to overlook Hernandez's consolidation of power, even though he supported the 2009 coup that ousted Zelaya for proposing a referendum on re-election.

"Better the devil you know than the devil you don't," said Ada Solorzano, a 57-year-old nurse said of Hernandez. "During his time in office, he's fought the gangs and the drug traffickers and he's improved the employment situation. We know he will continue the war on crime and that he plans to create more work."

Another Tegucigalpa resident, Klenia Corea, 26, said she, her family and friends were all voting for Nasralla, citing a lack of jobs for young people and the president's grip on law enforcement.

"He's got all the police," said Corea's mother, Yadira Salgado, 61. "He's got it all tied up."

'WOULD-BE STRONGMAN?'

Central America has long struggled with leaders from the right and left who have sidestepped or ignored constitutional constraints on power.

Should Hernandez win, U.S. officials say they want him to quickly revitalize a stalled bill to cap presidential terms.

"A would-be strongman?" Earl Anthony Wayne, a former U.S. ambassador to Mexico, wrote on Twitter in reference to Hernandez.

Honduras has traditionally had close ties with the United States, which viewed the country as an ideological and military partner during the leftist guerrilla insurgencies in the region throughout the Cold War era.

Hernandez has won favor with Washington, working closely on U.S.-bound migration with White House Chief of Staff John Kelly when he was head of U.S. Southern Command and the Department of Homeland Security, and leading a purge of the police force as well as making it easier to extradite drug bosses.

But Hernandez makes for an awkward partner, having faced accusations that drug and graft-stained money entered his campaigns and criticism that he has stifled dissent. Hernandez's office denies he has financial ties to drug money.

Nasralla wants to bring a United Nations-backed investigative body to Honduras to tackle political corruption and organized crime.

While the election is Hernandez's to lose, the question of term limits is paramount, said Jason Marczak of the Atlantic Council in Washington.

"It's imperative ... that a continuation in power does not lead to any backsliding on some of the gains that have been made," he said.

(Reporting by Gabriel Stargardter; Editing by Lisa Von Ahn and Peter Cooney)