(Corrects paragraph 6 to say Macri's preferred gubernatorial candidate, not Macri, won Buenos Aires province in 2015)
By Caroline Stauffer and Nicolás Misculin
BUENOS AIRES, Aug 13 (Reuters) - Argentines vote on Sunday in a closely watched mid-term primary election that will test their appetite for bringing back the left-wing populism of former President Cristina Fernandez.
Fernandez, who was indicted for corruption last year, is vying for a Senate seat in Buenos Aires province, home to nearly 40 percent of the country's voters. She is running against business friendly President Mauricio Macri's former education minister and other candidates from a divided opposition.
Investors and wealthy Argentines fear a Fernandez comeback in Congress could pave the way to her running for president in 2019. Her return to power would likely mean the end of Macri's reforms and a resumption of rampant spending, protection of industry and isolation from trade agreements and international capital markets.
A seat in Congress would give the 64-year-old Fernandez immunity from arrest, though not from trial. She dismisses the corruption accusations as politically motivated.
The compulsory primary vote on Sunday will essentially serve as a detailed poll ahead of the Oct. 22 election for one third of the Senate and half the lower house of Congress, as no major candidates are being challenged from within their own parties.
Though Macri's preferred candidate for governor won over Fernandez's pick in Buenos Aires province in 2015, Fernandez now appeals to many in its struggling industrial belt, where Argentina's emergence from recession in the second half of last year has yet to take hold.
The final weeks of primary campaigning were marked by repeated headlines highlighting gaffes from Esteban Bullrich, Macri's former education minister and scion of a wealthy Buenos Aires family. On Wednesday he apologized for calling the jailing of young people "progress."
Bullrich had previously suggested craft beer as an alternative employment opportunity for Argentines who had lost their jobs and was criticized by feminists for a radical anti-abortion stance.
Fernandez, who broke with Argentina's main opposition movement of Peronism for the election as some adherents form more moderate factions, meanwhile ran a relatively subdued campaign compared to her often fiery rhetoric and long speeches as president.
"We weren't always as humble as we should have been," she said of her presidency at her final rally.
Argentina's peso has weakened around 9 percent since Fernandez, who was president from 2007 to 2015, formed a new political party and declared her candidacy on June 24 even as the central bank sold $1.8 billion to curb the currency's drop.
In an interview for the Reuters Latin America investment summit, Macri admitted the race would be tight in Buenos Aires province but insisted that, more importantly, his coalition would win on a national level.
No matter how many seats his "Let's Change" coalition picks up, Macri will still lack a majority in Congress and continue to need to build alliances to pass reforms.
An opponent like Fernandez representing the country's most powerful economic district could make that all the more difficult.
"Labor, retirement and tax reform will require an agreement," said political analyst Rosendo Fraga. "If it wins Buenos Aires, the government will go into these negotiations strengthened, if it loses it will be much weaker." (Reporting by Caroline Stauffer; Editing by Mary Milliken)
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