* Quick count puts Democrat Party in lead, below expectations
* 170 million people eligible to vote
* Economy, jobs and corruption were key issues
* Five people die in election-related violence in Papua
By Sunanda Creagh and Olivia Rondonuwu
JAKARTA, April 9 (Reuters) - Indonesian President Susilo Bambang Yudhoyono's Democrat Party led in a quick count of voting from elections on Thursday, but was not doing as well as expected in a ballot seen as key to further reforms.
The early results indicate it will be tough for Yudhoyono's party to win a strong mandate in the parliamentary election, relying instead on coalition partners and reducing the prospects for sweeping reform in Southeast Asia's biggest economy.
The Democrats, which have led in most opinion polls, were ahead with about 20 percent followed by PDI-P with 15 percent based on about 80 percent of the quick count vote sample by the widely followed polling agency LSI.
Golkar, the long-time political vehicle for Suharto, the country's late autocratic ruler, had 14 percent of the votes.
"It's a very disappointing performance for the Democrat Party at this stage," said Kevin O'Rourke, a political risk analyst, noting that after earlier expectations it would get close to 30 percent, it now looked likely to get in the low 20s.
"Yudhoyono is going to have to rely on other parties as allies and this could mean another slow five years for institutional reform," he added.
"Yudhoyono is probably most likely to make practical alliances in the next parliament, allying with Golkar on market-oriented issues, but allowing the Islamic-oriented parties to influence institutional reform issues."
A party or coalition needs to get 25 percent of the national votes or a fifth of the total seats in parliament in order to field a candidate for the July 8 presidential vote.
Yudhoyono has pushed reform in a bid to attract much-needed foreign investment, whereas analysts say parties such as the PDI-P of former President Megawati Sukarnoputri and Golkar have shown less appetite for attacking vested interests.
PAPUA VIOLENCE
The elections, a massive exercise in democracy with more than 170 million eligible voters, were marred by overnight violence in which five people died in the eastern province of Papua.
The ballot has faced logistical problems ranging from incorrect voter rolls to confusion over new voting procedures, but the economy, jobs and corruption were among the top issues.
"Hopefully all this can bring better times for Indonesia, no more corruption," said Muhammad Zakaria, 18, a first-time voter in Jakarta.
The Democrat Party had been tipped to win the most seats in the poll, lifting its share of the vote from 7.5 percent in 2004 to as much as 29 percent, according to one recent poll.
Local financial markets were closed, but Indonesia's five-year CDS spread was quoted steady at 510 basis points, although markets were very quiet ahead of a holiday weekend.
Investors were awaiting the full results, but the CDS spread is at its tightest in five months, reflecting a general improvement in credit markets and risk appetite as well as reduced worries about Jakarta's ability to raise funds this year.
KINGMAKERS
Thirty-eight parties contested the elections, but opinion polls had suggested only three would end up with major blocs of votes -- the Democrats, PDI-P and Golkar.
But smaller parties, including many Islamic ones, could end up as kingmakers to form coalitions ahead of the presidential elections.
Yudhoyono, who has an approval rating of 45-52 percent, according to recent opinion polls, was Indonesia's first directly elected president and the first to serve a full five-year term since Suharto was forced to step down in 1998.
His administration has delivered stronger economic growth and brought relative peace and stability to the world's most populous Muslim nation, which also has sizeable religious minorities.
But tackling endemic graft in one of the world's most corrupt nations has proved far tougher. (Additional reporting by Dwi Oblo in YOGYKARTA, Reza Munawir in BANDA ACEH, Oka Barta Daud in JAYAPURA, Olivia Rondonuwu and Telly Nathalia in JAKARTA, and Rafael Nam in HONG KONG; Writing by Ed Davies/Sara Webb; Editing by Dean Yates)