Opposition groups have used the Eurovision spotlight, intended by Azerbaijan to promote the oil-rich country as a destination for tourism and business, to demand democratic reform and the resignation of the government.

Dozens of peaceful protesters have been arrested this month in Baku. Activists say some buildings in the centre of the city were torn down to make way for the Eurovision arena, an extravagantly illuminated 23,000-seat "Crystal Hall" on the shores of the Caspian Sea, and residents were forcibly evicted without proper compensation.

The 28-year-old pop singer won with the song "Euphoria" in the annual competition of 42 countries, delighting viewers and the contest's professional judges and dancing barefoot as she sang. After the show, traditionally heavy on kitsch, bizarre costumes and dramatic presentation but low on politics, Loreen steered clear of any controversial statements.

"This is about all of us! Thank you so very much!" she told a news conference. "Time has stopped," Loreen said about her feelings after she was announced as winner.

Russia's entry, rural folk group Buranovskiye Babushki (Grannies from Buranovo), dressed in traditional peasant dress and somewhat incongruous in the dancing spotlights, came in second. Serbia's Zeljko Joksimovic was third.

Last week, Loreen met activists who accuse the government of forcing people from their homes for the building of the hall, an accusation Baku denies. Azeri authorities accused her of making political statements that had no place at a musical event.

"Human rights are violated in Azerbaijan every day," the opposition newspaper Azadliq quoted Loreen as saying after last week's encounter. "One should not be silent about such things."

Opposition activists and international rights groups accuse President Ilham Aliyev of stifling dissent in the southern Caucasus nation, which became independent of the Soviet Union in 1991. Aliyev, who denies the accusation, has run the country since 2003, when he succeeded his father.

'HISTORICAL AND MAGICAL'

After the result was announced, hundreds of people poured onto a roundabout in central Stockholm, dancing in a fountain, honking horns and waving flags and playing the winning song.

"This is historical and magical! I think I'm going to die. This is the best thing that has happened to Sweden in 13 years!" said 20-year-old Tanja Tuuliainen, wearing a Swedish flag and drinking from a bottle of champagne with her girlfriends on the edge of a fountain in downtown Stockholm.

Sweden's entry last won the Eurovision competition in 1999.

Celebrants bathed in their underwear in the fountain, where Swedes traditionally celebrate major sporting event wins.

Hundreds sang "We're going up up up up up!!!", repeating a line from Loreen's song.

The Eurovision Song Contest has been a launching pad for international careers. Swedish pop group Abba became famous after winning in 1974 with "Waterloo" and Canada's Celine Dion took top honors in 1988 for Switzerland.

To promote talent over politically and geographically motivated bloc voting, professional judges now account for 50 percent of a performer's score.

The other half comes from telephone and SMS votes received by each contestant, with fans unable to vote for their own country's entry.

As winner, Sweden will host the next Eurovision contest.

(Additional reporting by Mia Shanley in Stockholm; Editing by Louise Ireland and Ralph Boulton)

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