Despite winning two of three state elections over the weekend, Mexico's governing party saw its victory margins shrivel in a country where its once-unchallenged power can no longer be taken for granted.

In the third election, the Institutional Revolutionary Party, known as the PRI, lost to the conservative National Action party in the small north-central state of Aguascalientes, according to nearly complete preliminary results Monday - even though polls showed that most voters liked the outgoing PRI governor.The three elections are among 10 gubernatorial races this year that help set the course for presidential elections in 2000.

Politicians in the three major parties already are jockeying publicly for the presidential nomination - unusual in a country where party chieftains traditionally have chosen candidates and frowned on expressions of ambition.

Despite its diminished margins of victory, the PRI said in a news release that the elections reaffirmed the party "as the first political force of the country." The release added, "These are times of high electoral competition in which victories and defeats should be judged in their fair dimension."