(Refiles fixing misspelling in lead paragraph)
* Boosts chances for PDI-P in parliamentary election
* Jakarta share prices rise on announcement
* Economist says don't get over excited
By Kanupriya Kapoor
JAKARTA, March 14 (Reuters) - Indonesia's main opposition PDI-P party named Jakarta governor Joko Widodo as its presidential candidate on Friday, the man widely seen as a shoo-in to be next leader of the world's third-largest democracy.
By choosing him, former president and party chief Megawati Sukarnoputri has also likely given a significant boost to her Indonesian Democratic Party's (PDI-P) chances in the April 9 parliamentary election. The presidential election is on July 9.
She has kept the country on tenterhooks for weeks over whether she would put aside her own ambitions to return to the presidential palace or back the governor, popularly known as Jokowi.
"I got a mandate from the chair of PDI-P Ibu Megawati to become the presidential candidate for the party. In the name of God I'm ready to carry it out," Jokowi told reporters before kissing the red and white national flag.
Two days earlier, he had accompanied Megawati to pray at the grave of her father Sukarno, the country's first president, and taken by many as a sign that Jokowi had clinched the nomination.
Signalling the Sukarno family hold over the PDI-P party, the announcement of Jokowi's candidacy was made by Megawati's daughter.
His nomination comes with huge expectations that he might finally be the leader who can fix Southeast Asia's biggest economy which has repeatedly fallen short of its promise in the face of rampant graft, confusing policy and weak leadership.
"This is excellent news ... I'm very hopeful about business sentiment going forward because this also means PDI-P will be very big in parliament and that's going to be a stabilising factor," said Jakob Friis Sorensen, head of EuroCham in Jakarta.
The main Jakarta stock index rose more than 3 percent after the announcement.
BOOST TO CONFIDENCE
"Jokowi's nomination will be a big boost to confidence and markets. His achievement in Solo (a city where he was previously mayor) speaks for itself, where he improved services and revenue. He is seen as pragmatic and clean," said Hak Bin Chua, economist at Bank of America Merrill Lynch in Singapore.
Opinion polls already predict that the party will win the most seats in April's general election. Parties need to win 20 percent of the seats in parliament or 25 per of the national vote to be allowed to nominate a candidate in the presidential election three months later.
In just over a year as governor of the Indonesian capital, he has won widespread national popularity for his straightforward style. Though his appeal cuts across social classes, he has won particularly strong following among the poor and fast emerging middle class.
In what would only be Indonesia's third direct presidential election, Jokowi represents a new generation of hands-on leaders in the world's largest Muslim population.
He has a huge lead in polls over more old-style rivals like former general Prabowo Subianto and tycoon Aburizal Bakrie in the race to the presidential palace in the capital.
He swept to national prominence after winning the Jakarta gubernatorial election in late 2012.
His popularity has since skyrocketed, with almost daily media coverage of his "blusukan" or spontaneous trips to the city's low-income neighbourhoods.
The slightly built Jokowi, 52, grew up in a riverbank slum in the central Javanese town of Surakarta, also known as Solo, and went on to own a small furniture business before becoming mayor of his city.
He has struck a chord with the average Indonesian voter. A victory for the rags-to-riches governor would mark a significant departure from the political norm in Indonesia, which has only ever seen the rule of members of the military and established political elite.
Indonesia spent its first half a century of independence under autocratic rule which finally came to an end amid social and financial chaos in 1998.
The focus will now likely shift to who PDI-P will pick as Jokowi's running mate. It has a large array to pick from but some in his party are looking to widely respected ex-vice president Jusuf Kalla.
But one economist warned that the excitement might be overdone, noting that PDI-P was not known as pro-market.
"He is a new breed of politician for Indonesia, and that freshness I can understand," wrote Robert Prior-Wandesforde, an economist at Credit Suisse in Singapore.
"But if (we) delve deeper, it seems to me that some caution is warranted, in the sense that I don't see him coming in and revolutionizing the macro-economic performance of the economy, introducing all sorts of business and market friendly, centre-right type economic policies." (Additional reporting by Andjarsari Paramaditha and Michael Taylor, Writing by Jonathan Thatcher)