The elections are the climax of an effort to bring political freedoms to the Indian Ocean archipelago in the wake of pro-democracy protests and international pressure.
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With almost 97.5 percent of the ballots counted, Nasheed had received about 54 percent of votes compared to 46 percent for Gayoom, the election commission announced, making it impossible for the veteran leader to win.
Nasheed had a 14,000-vote lead that put him safely above the 50 percent mark even if all the remaining ballots went to Gayoom, an election official said.
Voter turnout on Tuesday was estimated at 75 percent of the 209,000 electorate, election officials said.
The final tally is to be formally announced within five to six days, the official said.
Voters in the Maldives turned out in droves for the tiny atoll nation's first democratic presidential run-off, pitting Gayoom -- Asia's longest serving leader -- against Nasheed, whom the incumbent once jailed.