Morales, the country's first indigenous president, won a landslide re-election in December on the back of broad support from Bolivia's impoverished Indian majority.

He will formally take office in an inauguration ceremony on Friday.

The Indian ritual was intended to bring him good luck and shortly after it ended, Morales, an ally of socialist Venezuelan President Hugo Chavez, vowed to continue his leftist policies.

"We need to dream, brothers and sisters, dream with dignity, freedom; dream that the downtrodden will have access to education, health, basic services," he told thousands of supporters in Tiwanaku, a sacred site for Aymara and Quechua Indians south of La Paz.

Last year, Morales led an overhaul of the constitution to enshrine traditional religions and practices and give indigenous groups greater rights over their land in a move that helped to boost his popularity.

"Our great responsibility now is to deepen and accelerate the changes we've seen in Bolivia," said Morales, who in his first term nationalized energy, mining and telecommunications firms previously in the hands of foreign investors.

His state takeover of the natural gas industry in 2006 raised taxes on foreign companies in Bolivia including Spain's Repsol (REP.MC) and Brazil's Petrobras (PETR4.SA) (PBR.N) and brought a windfall that Morales used to boost social spending.

Critics say the nationalizations have scared away much-needed foreign investment and that his cash subsidies to the poor are aimed at buying political support.

Morales, a 50-year-old former llama herder who grew up in extreme poverty, needs foreign investors to forge ahead with ambitious plans to develop large-scale lithium, natural gas and steel projects because Bolivia lacks both capital and expertise.

Analysts say corruption and state inefficiency may hinder Morales' efforts to fight poverty and diversify the economy from its dependence on natural gas and mineral exports. (Writing by Eduardo Garcia; Additional reporting by Carlos Quiroga; Editing by Eric Walsh)