* Suicide bomber kills ally of presidential hopeful Ghani
* Death is fresh setback for efforts to end poll deadlock
* U.N.-monitored audit of election hit by various delays
* Kerry may be called for second intervention (Adds quotes, details)
By Jessica Donati
KABUL, July 29 (Reuters) - Afghan President Hamid Karzai's powerful cousin, a close ally of presidential candidate Ashraf Ghani, was killed in a suicide bomb attack on Tuesday, officials said, deepening strains over an election marred by fraud and under a U.N.-monitored review.
Hashmat Karzai was hosting an event for the Eid al-Fitr holiday at his home in the southern province of Kandahar, the cradle of the Taliban insurgency, when a man posing as a guest and described as well-dressed set off explosives, the local governor's office said. No one else was killed in the attack.
There was no immediate claim of responsibility.
The motives for the assassination were not immediately clear, but the killing deals another setback to hopes that the deadlock over the electoral contest to replace Hamid Karzai as president will be quickly resolved.
A new president was initially due to be sworn in on Aug. 2, but Western diplomats say it could take weeks, possibly months, before a new leader officially takes office. The delays have fueled security concerns and uncertainty now hangs over a deal to keep U.S. troops in the country beyond the end of the year.
Sources have expressed anxiety about continued bickering between Ghani and his rival Abdullah Abdullah despite a U.S.-brokered agreement this month to put aside their differences for the sake of national peace.
U.S. Secretary of State John Kerry, who visited Kabul this month, will probably have to make a follow-up visit to cajole Ghani, the winner according to provincial results, and Abdullah into forming a unity government, U.S. officials say.
President Barack Obama has also urged the two Afghan candidates to iron out their differences.
An influential power broker in Kandahar province, Hashmat Karzai lived in the family's hometown and famously kept a pet lion and other exotic animals at his villa.
His early support for Ghani ahead of the first round of the election drew attention to deep tribal divisions emerging in the Pashtun south and to an ongoing feud between Hashmat Karzai and his cousin, the president.
Hashmat's influence in the province, a stronghold of the Pashtun ethnic majority, grew after the 2011 murder of another powerful relative, the president's half-brother Ahmed Wali.
Hashmat was fiercely critical of the president and was known to have many enemies both within and outside the Karzai clan.
Ghani said he was shocked by the killing of his adviser and condemned the act, a sentiment echoed by President Karzai.
The deadlocked election that aims to transfer power democratically for the first time in Afghan history is taking place as most foreign troops prepare to leave by the end of the year after over a decade of war that ousted the Taliban in 2001.
Millions of Afghans defied Taliban threats to vote in two rounds of the ballot, but mass fraud spoiled the election and the United Nations was asked to oversee a full-scale audit.
The process is moving slowly and has already been suspended on three occasions due to bickering over technicalities. The audit has been further delayed this week by the Eid holiday and is not expected to resume until Thursday at the earliest.
Underlining a lack of urgency on both sides, Abdullah and Ghani left Afghanistan this week for vacation. They are due back at the end of the week.
An extended delay could jeopardise the future of U.S. troops in Afghanistan. Their presence beyond 2014 hinges on a bilateral security deal that Karzai has refused to sign. The agreement would keep about 10,000 U.S. troops in the country and both Abdullah and Ghani have promised to sign promptly if elected.
At least a quarter of the eight million votes cast are likely to be fraudulent, according to several diplomatic sources, who have been drafted into the process.
A Western diplomat said that, while Ghani and Abdullah had agreed in principle to form a unity government, their disparate supporters have threatened to derail the compromise as they fear they might miss out on getting a slice of power.
"For me, the election is dead and finished," said a Western diplomat on Tuesday, adding it might be impossible to determine who is the legitimate winner due to the scale of fraud. (Additional reporting by Jeremy Laurence; Editing by Jeremy Laurence, Robert Birsel and Gareth Jones)