UPDATE 3-Argentina's Peronist left returns as Fernandez sworn in to power

Argentina's Peronist leader, Alberto Fernandez, was sworn in as president on Tuesday, marking a shift to the left for Latin America's No. 3 economy as the country fights rampant inflation, credit default fears and rising poverty. The 60-year-old center-left politician took his presidential oath in front of cheering lawmakers in Congress along with political leaders from the region and representatives from major trade partners including Brazil and the United States.

In an hour-long speech he criticized rising rates of hunger and poverty and said the country needed to revive growth to escape from "virtual default" after a period of painful austerity under outgoing conservative Mauricio Macri. "We have to heal so many open wounds in our homeland," he said in the speech in Congress after he had symbolically taken the presidential baton and sash from Macri, whose administration was hit by recession and a spiraling debt crisis.

Fernandez pledged to bridge social divisions and to roll out a "massive" credit system with low rates to bolster domestic demand, something he made a pillar of his campaign. "Without bread there is no present or future, without bread life only suffers," he said.

The rise of Fernandez marks a return of Argentina's powerful left-leaning Peronists, including Vice President Cristina Fernandez de Kirchner, a rock-star populist politician who clashed with investors and farmers during her twin terms between 2007-2015. PARTY ATMOSPHERE

In a move to underscore his man-of-the-people credentials Fernandez had driven himself in his silver Toyota to Congress, waving to crowds lined along the roadside. In the historical Plaza de Mayo square in the center of Buenos Aires supporters gathered opposite the pink-hued Casa Rosada palace, waving banners and beating drums while food vendors grilled "choripan" sausages in the summer heat.

"Today there is going to be a party," said Rafael Mantero, 45, a food vendor from the city of Rosario, who said he voted for Fernandez because his own sales had fallen by around half in the last couple of years under Macri. "These past four years were terrible for me economically."

The new administration is expected to usher in growth-focused policies after unpopular fiscal tightening, which critics warn could strain already depleted state coffers and potentially fan tensions with creditors. Colorful banners hung around the central city square on Tuesday, many from unions and grassroots organizations who helped drive the Peronists back to power. T-shirts with the face of Fernandez de Kirchner read "We're back."

Supporters hope Fernandez can tackle annual inflation running above 50%, poverty approaching 40% amid the recession, and tricky restructuring talks over around $100 billion in sovereign debt with lenders including the International Monetary Fund. In a reflection of political challenges ahead, Brazil's right-wing leader, Jair Bolsonaro, who has clashed publicly with Fernandez, did not attend, the first time since 2002 a Brazilian president has not attended the inauguration in Buenos Aires.

IT'S THE ECONOMY Hard-hit Argentines, investors and markets are watching Fernandez closely for his plans to right the economy. He picked Martín Guzmán, a young disciple of the Nobel Prize winner Joseph Stiglitz, to head the economy ministry last week.

"Alberto needs to improve the economic and social situation," said Verónica Quintana, 34, selling flags in the central square. "There are many people who are hungry and it is a critical situation we are in." Many investors have been worried about Fernandez ushering in greater state intervention, as happened under Fernandez de Kirchner during her back-to-back administrations.

Fernandez, a political operator who burst into the limelight just this year, will need to balance varied demands of his broad Peronist coalition and pressure from Macri's weakened, though still influential, party. With little financial firepower, Fernandez has worker unions demanding wage increases to make up for high inflation and charities calling for an increase in subsidies for the poor.

Political analyst Julio Burdman said this juggling act would be Fernandez's biggest challenge. "He needs to do a rapid maneuver to get the economy started again, which will all depend on how he is able to handle the debt."

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