LISBON, Sept 27 (Reuters) - Portugal"s ruling Socialists suffered a surprise setback in Sunday"s municipal elections, losing control of Lisbon after 14 years, though they remained the biggest party nationwide after a ballot that encompassed more than 300 city and town halls. Carlos Moedas, former European Commissioner for Research, Science and Innovation from the main opposition Social Democratic Party (PSD), won Lisbon by a margin of just 1 percentage point, securing 34.25% for his centre-right party"s alliance with the conservative CDS-PP. "We start a new cycle today... which I believe begins in Lisbon but will not end in Lisbon," Moedas, who seeks to make the city a "unicorn factory" for tech startups, said in his victory speech in the early hours on Monday. Portugal"s Prime Minister Antonio Costa, a former mayor of Lisbon, expressed disappointment over his party"s loss there. "It"s lamentable but this is how democracy works. As everyone knows, the defeat was unexpected ... I feel frustration, obviously," he said. But overall, with 99% of the ballots counted, the Socialists took 34.4% of the vote and 147 municipalities across Portugal, well ahead of the PSD, which took 24% either on its own or in alliance with the CDS-PP. The result is slightly below that achieved by the Socialists in the last parliamentary election in 2019 and in the previous municipal elections in 2017. The Communist Party came third with 8.2% and the Left Bloc scored just 2.8%. The far-right Chega party, whose rise since the election of their first member of parliament in 2019 has shaken up the political landscape, won just 4.2% of the vote and zero municipalities, falling well short of its goal of becoming the third-largest political force.