Foreign Minister Tarja Halonen has narrowly won Finland's presidential election, becoming the country's first female head of state.

Her opponent, conservative opposition leader Esko Aho, conceded defeat after a close second-round contest.

With 99% of votes counted, the 56-year-old single mother and former leftist radical had captured 51.6% to Mr Aho's 48.4%.

"The division of votes strongly suggests that this is the final outcome," Mr Aho told reporters after earlier returns made the vote too close to call.

"This is a historical moment for Finland - we have got our first female president," said Prime Minister Paavo Lipponen, a Social Democrat like Ms Halonen.

Ms Halonen told her celebrating supporters that she was happy a woman would be Finland's 11th president.

She had earlier urged voters to forget her politics and testify to Finland's advanced gender equality by electing her.

Her chances looked in danger earlier in the week when Mr Aho, while deploring the rise of Joerg Haider's Freedom Party in Austria, struck a chord with many Finns by criticising the European Union over its tough stance towards Vienna.