Pakistani President Pervez Musharraf's opponents headed for election victory on Tuesday after voters rejected his former ruling party, raising questions about the future of the US ally who has ruled since 1999.

No party is expected to win a majority in the 342-seat National Assembly but the opposition parties of assassinated former prime minister Benazir Bhutto and another former prime minister, Nawaz Sharif, were set to be the biggest.

Whichever is bigger will be best placed to lead a coalition. As president, former army chief Musharraf did not contest Monday's elections, aimed at completing a transition to civilian rule, but the outcome could seal his fate.

A hostile parliament could try to remove Musharraf, who took power as a general in a 1999 coup and emerged as a crucial US ally in a 'war on terror' that most Pakistanis think is Washington's, not theirs.

The election was relatively peaceful after a bloody campaign and opposition fears of rampant rigging by Musharraf's supporters proved unfounded.

Pakistan's main stock market welcomed the peaceful polls and absence of complaints over rigging, and shares rose more than 1 percent early. But dealers said the formation of a parliament hostile to Musharraf would make investors nervous.

The vote was postponed from January 8 after Bhutto was assassinated in a suicide attack on December 27, which raised concern about the nuclear-armed country's stability. Bhutto's Pakistan People's Party (PPP) had been expected to reap a sympathy vote and was winning the most seats, partial results showed.

Unofficial Election Commission tallies also showed Sharif's party doing surprisingly well and leading in Punjab province where half the members of parliament will be elected.

As results came in showing prominent members of the pro-Musharraf Pakistan Muslim League (PML) losing seats, analysts weighed the implications for a president whose popularity has slumped over the past year.

'It's the moment of truth for the president,' said Abbas Nasir, editor of the Dawn newspaper.

'There will be thoughts swirling in his mind, whether he can forge a working relationship with two parties whose leadership he kept out of the country.'-Reuters