By Kanupriya Kapoor and Randy Fabi

JAKARTA (Reuters) - Indonesian presidential frontrunner Joko "Jokowi" Widodo has joined hands with the country's most popular Islamic party, cementing the surprise resurgence of Muslim parties in this year's election and possibly renewing their voice in the new government.

The National Awakening Party (PKB) on Saturday became the latest party to back Jokowi's Indonesian Democratic-Party of Struggle (PDI-P) and his bid for president on July 9.

PKB's endorsement is particularly important for Jokowi, as it will help him appeal to the Islamic vote in the world's most populous Muslim nation, where most practice a moderate form of the religion.

"PDI-P and PKB have similar historical traces, ideology and chemistry since the beginning," Hasto Kristiyanto, PDI-P's deputy secretary general, told Reuters following the announcement of their coalition, which also includes the National Democrat (NasDem) party.

PKB is allied with the country's biggest Muslim organization, the moderate Nahdlatul Ulama, and has pledged to keep religion out of policy-making. PKB won the most votes of the five Islamic-based parties in April's parliamentary elections, which set the stage for the presidential poll.

Only candidates backed by parties or coalitions with at least 25 percent of the vote or 20 percent of parliamentary seats can contest.

Jokowi's PDI-P won the most votes but was short of the required 25 percent, although it reached the mark with support from NasDem alone. PKB's support will add weight to his candidacy.

Investors also hope the addition of more parties to Jokowi's coalition will give him the political clout in parliament to pass major reforms if elected.

PKB's policy outlook was in any case already broadly aligned with PDI-P.

"PKB doesn't believe in mixing religion with politics," Helmy Faishal, a senior PKB official told Reuters. "The only concern we have about religion is how to ensure religious freedom for everybody, including minorities."

Analysts say PKB, which backs agrarian reform, is unlikely to change the nationalistic agenda of Jokowi and PDI-P.

"PKB's pluralistic ideal is also in line with PDI-P's nationalist ideal of unity in diversity. As such, we don't expect that either PDI-P or PKB will lean towards more sectarian views," said Pitra Narendra, a Jakarta-based senior associate of corporate advisory firm Vriens & Partners.

Jokowi, who has so far been largely silent on policy details, has indicated he would phase out agricultural imports with the aim of achieving self-sufficiency.

THE RIVALS

Recent media reports indicate his rivals Prabowo Subianto, a former general, and tycoon Aburizal Bakrie may team up to form one ticket, though neither has yet conceded his presidential ambition.

Candidate pairs need to be registered with the election body by May 18. If no candidate wins a simple majority in the July race, there will be a second round in September. The new president will take office in October.

Moderate Islamic parties made an unexpected comeback in April's legislative election, securing enough votes to be wooed by the larger parties looking to form coalitions.

Indonesia's five Islamic parties managed to get more than 31 percent of the vote in the April election, up slightly from the record low of 29 percent in the 2009 poll.

"Islamic parties did better in the legislative elections - very likely because they are perceived as less corrupt than 'secular' parties," said Damien Kingsbury, an expert on Southeast Asia at Australia's Deakin University.

Of these parties, PKB did the best because it recruited several non-Muslim candidates to broaden its appeal, politicians said.

The current coalition government of President Susilo Bambang Yudhoyono has maintained good relations with Islamic parties. But some critics say he has allowed more conservative parties to heavily influence the way the government handles religious minorities.

Indonesia recognizes five religions apart from Islam, including Hinduism, Christianity, and Buddhism.

PKB was also able to get its biggest backer, Nahdlatul Ulama (NU), to mobilize its nearly 40 million members to come out and vote. NU says it communicates regularly with PKB but has no intention of intervening in policy affairs.

"What's important is that our behavior is Islamic and by that I mean upholding justice, rule of law, defending ordinary citizens' rights, welfare, health, stability—all that is in line with Islam," said Said Aqil Siradj, the head of NU. "We don't need an Islamic country or Islamic parties to do that."

(Editing by Raju Gopalakrishnan)