Voters in the central US state of Iowa handed a victory to conservative Senator Ted Cruz late Monday as billionaire businessman Donald Trump finished in second place among Republican voters, while Democrat Hillary Rodham Clinton was locked in a too-close-to-call race with rival Bernie Sanders.

Cruz won 28 per cent of the vote to Trump's 24 per cent, with 99 per cent of precincts reporting, according to broadcaster CNN.

Florida Senator Marco Rubio was in a close third place with 23 per cent, better than opinion polls had indicated ahead of the first hurdle for candidates seeking to rise to the nation's highest elected office.

On the Democratic side, Clinton and Sanders are locked in a virtual tie, with Clinton ahead by just 0.4 percentage points, with 90 per cent of precincts reporting.

The Iowa caucuses were the first test in a race that has defied traditional political wisdom with the rise of billionaire Trump and a self-declared democratic socialist, Sanders, making a strong showing among Democrats.

Speculation had swirled about whether former secretary of state Clinton could again lose the state to an upstart challenger after falling to Barack Obama in the 2008 caucuses.

Cruz had relied on extensive get-out-the-vote efforts to push him ahead of Trump, who had run an unconventional campaign marked by large rallies but had been plagued by questions about whether his supporters would actually vote.

Trump, who has played up his outsider status in vitriolic rants against the political establishment, his opponents and the media, vowed to fight on in the next contest in the north-eastern state of New Hampshire next week and eventually come out on top nationwide.

"We will go on to get to the Republican nomination, and we will easily go on to beat Hillary [Clinton] or Bernie [Sanders], or whoever the hell they throw up there," Trump told supporters after losing to Cruz, who had trailed Trump in opinion surveys going into the vote.

Rubio's stronger than expected result could secure his status as the favoured candidate among the party's establishment, which opposes Cruz as a disagreeable hardliner and sees Trump as an outside usurper.

"When I am our nominee, we are going to unify this party, and we are going to unify the conservative movement," he said in a buoyant speech to supporters in Iowa.

He vowed to expand the conservative party's appeal to people struggling economically, "and bring them to our side."

Many of the 11 Republican and three Democratic candidates had held rallies and shook hands across the rural Midwestern state into the final hours before the caucuses began, but some, including former Florida governor Jeb Bush had already turned their attention to the next contest, the New Hampshire primary on February 9.

For decades, Iowa has been first to vote in the state-by-state nominating process leading up to this year's national party conventions in July. The general election is November 8.

The Iowa contest traditionally winnows down the field of candidates, and as results rolled in, Democrat Martin O'Malley and Republican Mike Huckabee, who received few votes in Iowa, both quit the race.

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