* Opposition PDI-P party expected to dominate
* Election expected to help its presidential candidate Jokowi
* Campaign notable for lack of policy initiatives
* Fortunes of Islamic parties on the wane (Recasts with updated quick vote counts)
By Kanupriya Kapoor and Fergus Jensen
JAKARTA, April 9 (Reuters) - Indonesians voted for a new parliament on Wednesday in a poll expected to be dominated by the opposition Indonesian Democratic Party-Struggle (PDI-P), boosting the chances of its popular candidate in a presidential election three months from now.
Already, the star of the election is Jakarta governor Joko Widodo, widely known as Jokowi, whom opinion polls suggest will almost certainly be the next president of Southeast Asia's biggest economy.
But very early quick counts suggested that PDI-P, while in front, did not yet have the necessary number of votes that would allow it to nominate Jokowi in July's presidential election without forming a coalition with one or more or the 11 other parties contesting Wednesday's vote.
"I'm very confident. My party will do very well," Jokowi said in English after voting with his wife in central Jakarta, according to the Detik.com news website.
His party needs 25 percent of the national vote, or 20 percent of seats in parliament, to nominate him on its own.
Based on up to 30 percent of votes counted from a sampling of 2,000 polling stations across the world's third biggest democracy, PDI-P was in front. But it only had some 20 percent of votes.
However, Tobias Basuki, of think-tank CSIS which is organising a quick count, said he would not be prepared to call a result until at least 80 percent of the sampling had been counted.
Indonesia has about 500,000 polling stations and more than 186 million registered voters.
An official with one election observer, who asked not to be identified because he was not authorised to speak to the media, said turnout appeared to be lower than the about 70 percent in the last general election in 2009.
Indonesia's embrace of democracy since the downfall of former authoritarian leader Suharto 16 years ago has seen four different presidents and repeated change of the leading party.
Predictions of a Jokowi presidency and strong showing by his party have helped lift shares prices and the rupiah, Asia's best performing currency this year, on expectations that it would bring more decisive government. Analysts say if PDI-P does do well, markets will likely rise further.
The stock market, up 15 percent this year, was closed as Wednesday was declared a public holiday for the vote.
Campaigning has been notable for its lack of policy initiatives to give the economy a boost. Growth is expected to be a little more than 5 percent this year, but has weakened partly on the fall in prices for commodities that still form a backbone for the resource-rich economy.
Jokowi has offered little clue to his policies but his popularity rests heavily on his no-nonsense style in running the capital, demanding his bureaucrats perform their jobs properly and by focusing many policies on improving the lives of ordinary Jakartans.
"THE RIGHT WAY"
Voting began in distant eastern islands and finished two time zones away in the densely populated west at 0600 GMT.
There were no reports of violence.
Much of the political debate has shifted already to who might become the vice-presidential candidate with Jokowi, who has no experience on the national political stage.
The two other main parties likely to perform well are Golkar, one-time parliamentary vehicle of the long-serving Suharto, and Gerindra which is led by ex-general Prabowo Subianto.
Both may struggle to meet the threshhold to contest the presidency, suggesting there will be intense horse-trading among smaller parties to form coalitions once results are known.
Backing for the ruling Democratic Party of outgoing President Susilo Bambang Yudhoyono has fallen to single digits after it was hit by a series of high-profile graft cases last year. Yudhoyono is limited by the constitution to two terms.
Yudhoyono is Indonesia's first leader to be chosen by direct election.
"Even though we are still fixing and perfecting the system of holding these (elections), once again Indonesia can be grateful because our democratic journey is going the right way," he told reporters.
Islamic parties, which became popular after the fall of Suharto, have also seen their fortunes fade in the world's most populous Muslim nation, hit by corruption scandals and a strong focus on pluralism in mainstream politics. Five Islamic parties are running compared with eight in 2009.
However, early counts showed they had risen in popularity but key regions have yet to be counted.
Voters, nearly a third of them under 30, chose between 6,600 candidates vying for national parliament seats. Elections were also held for 19,007 provincial and district legislative assembly seats.
Most Indonesians view parliament as among their country's most corrupt institutions, according to a 2013 Transparency International survey. Under the presidential system, however, the executive branch has the authority to overrule it. (Additional reporting by Anastasia Arvirianty,; Writing by Jonathan Thatcher; Editng by Robert Birsel)
Our Standards: The Thomson Reuters Trust Principles.
