* Danish PM Rasmussen to be new NATO chief
* Says will resign as prime minister on Sunday
* Points to Finance Minister Lokke Rasmussen to succeed him
* Opposition demands general election
(Adds resignation day, details, quotes)
By Rasmus Jorgensen
COPENHAGEN, April 4 (Reuters) - Danish Prime Minister Anders Fogh Rasmussen said he would resign on Sunday after accepting the job of NATO secretary-general and wanted Finance Minister Lars Lokke Rasmussen to replace him.
"I have returned home quickly after the NATO summit because I want a resolution in Denmark, and therefore I will go to the queen tomorrow to hand in my resignation and recommend Lars Lokke Rasmussen as my successor," Fogh Rasmussen told Danish TV2 on Saturday evening.
Earlier, at a news conference in the French city of Strasbourg Fogh Rasmussen, 56, said he was convinced that Lokke Rasmussen -- who is not related to him -- would be an excellent leader of Denmark's ruling centre-right coalition.
"Over his long period in politics, Lars has amassed impressive and broad political knowledge. As a minister he has led a number of extensive reforms. He knows how the political machine works and he's a great communicator," Fogh Rasmussen said.
Lokke Rasmussen, 44, deputy leader of Fogh Rasmussen's Liberal Party, is expected to continue his predecessor's pro-growth, tax-cutting policies but will face the task of leading negotiations for a global climate treaty in Copenhagen in December and steering Denmark through the economic crisis.
"The big challenge for Lokke is the economy," Peter Kurrild-Klitgaard, professor of political science at Copenhagen University, told Reuters. Another major challenge was that the opposition were ahead of the coalition in most polls, he added.
"Denmark has weathered the economic crisis better than most countries, but the major challenge will be if the economic tidal wave really hits", Kurrild-Klitgaard said.
TRAILING THE OPPOSITION
The government's mandate expires in 2011, and Lokke Rasmussen could call an early election at any time or wait until then. Recent polls show his coalition trailing the opposition and he is unlikely to call an election soon.
Lokke Rasmussen, who did not speak to the media on Saturday, also has to decide whether to keep his predecessor's promise to hold a referendum on Denmark's European Union opt-outs, including on the euro, during the current parliamentary term.
Helle Thorning-Schmidt, leader of the main Social Democrat opposition, told Reuters she could defeat Lokke if given the opportunity and demanded a general election.
"I could have beaten Fogh at the next election and I am sure that the opposition and I will be able to beat Lars Lokke, because his economic policy for Denmark is wrong," she said.
But the junior coalition partner, the Conservatives, and the coalition's ally, the Danish People's Party, both said they would support Lokke, meaning he could take power without a popular vote.
When Lokke takes over, the cabinet will step down and Lokke is free to appoint new ministers. Analysts are tipping Fogh's key aide and party strategist, Claus Frederiksen, to become finance minister.