UPDATE 2-Former president Pinera takes early lead in Chile election

(Recasts with partial results, projection)

SANTIAGO, Dec 17 (Reuters) - Billionaire conservative Sebastian Pinera took the lead in an early count of ballots in Chile's runoff election for the presidency by a larger-than-expected margin over his center-left rival on Sunday, official results showed.

With some 26 percent of ballots counted, Pinera, who was president between 2010 and 2014, had 54 percent of votes, while senator and former journalist Alejandro Guillier had 46 percent, Chile's electoral agency Servel said.

Respected local broadcaster Radio Bio-Bio also forecast Pinera would win the vote, in what would be a sign of discontent with outgoing President Michelle Bachelet's policies.

Both candidates would keep in place Chile's longstanding free-market economic model, but investor favorite Pinera has promised lower taxes to turbocharge growth while Guillier wants the government to press on with Bachelet's overhaul of education, taxes and labor.

Strong-than-expected support in Chile for hard-left Beatriz Sanchez and far-right Jose Antonio Kast in the Nov. 19 first round pushed Pinera and Guillier to try to attract voters unhappy with the status quo in what is widely considered Latin America's most developed nation.

Large swathes of voters were left with the option of voting for candidates they did not particularly like or staying home in one of the few countries in the region where voting is not mandatory.

To win, Guillier needed to capture many of Sanchez's votes.

(Additional reporting by Felipe Iturrieta and Caroline Stauffer; Writing by Caroline Stauffer; Editing by Jeffrey Benkoe and Rosalba O'Brien)