By Sofia Menchu and Diego Oré

GUATEMALA CITY (Reuters) -Guatemalans began voting on Sunday in a hotly contested presidential election dominated by concerns over corruption, the exclusion of a leading candidate and the cost of living, with the vote set to result in a second round run-off in August.

Former first lady Sandra Torres is tipped to win the first round but is expected to fall short of the 50% plus one vote needed for an outright victory in the contest, the fairness of which has come under international scrutiny.

She is up against more than 20 other candidates, including Edmond Mulet, a career diplomat, and Zury Rios, daughter of the late dictator Efrain Rios Montt.

Julio Valenzuela, a 40-year-old audio producer, told Reuters as he cast his vote that he hopes campaign promises will be kept, and that the new leader can build a brighter future.

"What we Guatemalans hope is that everything they have promised is fulfilled...We want them (politicians) to deliver and not only with the urban area but also in the interior," he said.

The race to succeed conservative President Alejandro Giammattei, who is limited by law to one term, has been overshadowed by a court ruling to block four candidates from the ballot including early front-runner, businessman Carlos Pineda.

The United States and the European Union criticized the exclusion of Pineda, who called the decision "electoral fraud."

"We do not see a process that is governed by international standards, but rather one where arbitrary criteria are used," said Carolina Jimenez, president of think tank Washington Office on Latin America (WOLA). "That is tremendously serious."

In addition to electing the president and vice president, 9.3 million eligible voters also choose a new Congress, hundreds of mayors and 20 members of the Central American Parliament.

Polls opened at 7:00 a.m. and will close at 6:00 p.m. local time (1300-0000 GMT). Preliminary results are expected from 9:30 p.m. local time on Sunday.

Stakes in the election are high, given deteriorating standards of transparency and human rights in recent years, as well as ongoing poverty, corruption and violence.

"(The next) four years won't allow time to undo how poorly managed the government has been for so many year," said Andres Nolasco, a 25-year-old accountant from Guatemala City. "But it is possible to start taking a different path."

Political analysts predict that a fragmented Congress will limit any of the candidates from enabling real change.

Polls currently predict that Torres, the ex-wife of late president Alvaro Colom (2008-2012), will likely lose a head-to-head runoff given her lack of popularity in the capital Guatemala City, home to a high percentage of the electorate.

This is the 67-year-old politician's third run for president. She finished second in the previous two races.

(Reporting by Sofía Menchú in Guatemala City and Diego Oré in Mexico City; Writing by Isabel Woodford; Editing by Daniel Wallis and Chizu Nomiyama)