The party that has dominated Indonesian politics for three decades appeared today to have lost its parliamentary majority in the country's first free elections in 44 years, according to fractional official returns and reports from election observers and political parties.

Golkar, the party long headed by former president Suharto, appeared to be losing to the Indonesian Democratic Party of Struggle (PDI-P), led by popular opposition leader Megawati Sukarnoputri. But Golkar is unlikely to go down without a fight, according to a top party official who said the organization still hopes to form a ruling coalition with smaller parties.

Still, party deputy chairman Marzuki Darusman conceded that Golkar faces the prospect of going into opposition for the first time in its history. "We're having to acknowledge the distinct possibility that PDI-P will be the front-runner. But we won't be that far behind," he said. "It's more of a protest vote against Golkar than any pro-vote for change."

That result -- if confirmed when final returns from Monday's vote come in from around the vast Indonesian archipelago -- would mark a historic turn after a turbulent year that began when Suharto resigned after 32 years in power in the face of a crippling economic crisis and widespread public disorder. His resignation opened the way for a dramatic political awakening that set Indonesia on a course to become the world's third most-populous democracy, after India and the United States.

With just 3 million votes counted out of the estimated 100 million cast, Sukarnoputri's party was far out front this morning with 38.22 percent. In second place was Sukarnoputri's ally, the Muslim-led National Awakening Party, which had 23.20 percent. Golkar, led by President B.J. Habibie, was in third place with just more than 15 percent of the vote.

As political parties across the spectrum began publicly complaining about the slow pace of the counting, and warning of possible vote-rigging, election officials cautioned it could be several more days before a real trend emerged.

Despite the slow counting, many Indonesians appeared giddy at the likelihood that Golkar was about to go down to defeat. "My hunch is that Golkar is a finished force," said Jusuf Wanandi, board chairman of the Center for Strategic and International Studies, a research center here. "The overwhelming victory of PDI-P is for real."

In sharp contrast with the days of Suharto's rule, when only three government-approved parties were permitted to run for parliament, 48 parties battled for the 462 elective seats in Indonesia's 500-seat legislature. Members of parliament and 200 government appointees will meet in November to choose Indonesia's next president. Monday's voter turnout was reported at 96 percent.

The elections were surprisingly peaceful across this nation of more than 2,000 islands, despite predictions of widespread violence, and Indonesian financial markets today seemed to render a favorable verdict. Stock prices on the local exchange surged 12 percent to a 22-month high, and the currency, the rupiah, gained 5 percent against the dollar in an apparent sign of confidence in the country's prospects for political stability.

Election observers too were calling Indonesia's experiment with democracy a success. Despite some logistical flaws, they said, the balloting appears to have been conducted freely and fairly, with little evidence of the widespread cheating and vote-buying that many had feared.

"I have never seen, outside of the Philippines, the kind of enthusiastic outburst that the Indonesian voters had," said Jose S. Concepcion Jr., chairman of the Philippines-based National Citizens' Movement for Free Elections. "It showed a new spirit of democracy."

Former president Jimmy Carter, leading a 100-member joint monitoring team from the Atlanta-based Carter Center and the National Democratic Institute for International Affairs, also said the elections appeared to be free and fair. "So far, this has been an excellent election," Carter told reporters. He said his team would reserve final judgment until the counting is complete.

CAPTION: Megawati Sukarnoputri's party has taken a strong early lead.