By Saleh Al-Shaibany

MUSCAT (Reuters) - Hoping for jobs and democratic change, voters in Oman cast ballots in their first municipal election on Saturday, a sign of modest reform in response to protests inspired by the Arab Spring.

The small Gulf oil producer, ruled since 1970 by Sultan Qaboos, sits opposite Iran on the Strait of Hormuz, the conduit for nearly a fifth of globally traded petroleum.

Its only other elections are for the Shura Council, a body that has some limited legislative powers. Increased democracy was a main demand of protesters in Omani cities during the Arab uprisings last year, along with jobs and an end to corruption.

"We feel the change is coming with this new election that will give us the opportunity to ask officials to openly explain their actions and admit their mistakes," said voter Harib Khalfan in the Seeb district of Muscat.

At the polling station in Seeb, set up in a schoolhouse, about 50 people queued to cast their ballots while others stood in the shade and discussed which way to vote.

Voting in the capital and nearby coastal town of Barka appeared quieter than during last year's election for the Shura Council. Activists from last year's protest movement welcomed the election but cautioned that it was too early to tell whether it would lead to meaningful change.

"It's good. This is what we've been protesting for, but it's too early to celebrate. Let's wait and see," said activist Ismail al-Rasbi.

Some 1,475 candidates are seeking places on 192 local councils in the country of 2.8 million people. There were no reports of protests or other incidents across the country on Saturday afternoon. Each polling station Reuters visited had a police car parked outside to prevent trouble.

ARAB SPRING

Protests erupted in several Omani towns early last year inspired by the Arab Spring uprisings, as demonstrators blocked major roads and went on strike demanding better pay, more jobs, action against graft and some democratic changes.

But Sultan Qaboos remains a popular figure in a country that was mostly undeveloped and faced war in its Dhofar region when he seized power from his father.

After the demonstrations, he swiftly reshuffled his cabinet and the government promised to create thousands of jobs, announced plans for municipal polls and granted the Shura Council some legislative power, with the right to approve or reject draft laws. The sultan, however, retains the final say.

Two of the Shura Council members elected last year were activists from the industrial town of Sohar, the site of the biggest protests. Nine council members now sit in the 28-strong cabinet

"I am here to vote because I feel the elections will eventually create a government that will entirely consist of an elected cabinet of ministers," said Maryam Shariff, a 32-year old university lecturer, as she waited to vote.

Although municipal councils have only limited powers, some voters expressed hope they might spur job growth via their influence over local businesses.

"I am here on the guarantee that the person I am voting for will work hard to find us jobs," said Badr Saif, a 24-year old school dropout from Barka.

Oman says it created 52,000 public sector jobs in the first 10 months of this year, and at least 22,000 in the private sector, cutting the number of registered unemployed by three-quarters to just over 17,000.

(Reporting By Saleh Al-Shaibany; Editing by Angus McDowall in Riyadh and Mark Trevelyan in London)