Mongolians awoke to uncertainty on Monday, awaiting results of a general election that saw the country's two main parties in a dead heat and seeking to avoid a deadlock that could stall key mining deals.

The Mongolian People's Revolutionary Party (MPRP) and the Democratic Party were both confident judging from early returns, but votes in the capital were still uncounted and there was confusion in some areas because of a new voting system.

In the countryside it's looking quite good for us. We are expecting a majority, said Sukhbaatar Uyanga of the MPRP, whose leader Sanjaagiin Bayar is the country's third prime minister in the last four years.

The party ruled Mongolia as a Soviet satellite for much of the last century but has since embraced market reforms.

Local television showed a Democratic Party spokesman predicting victory in some rural districts, but added in several constituencies the race is very tight.

Both parties say they support the ratification of a draft investment agreement that would give the go ahead to Ivanhoe Mines and Rio Tinto to develop the massive Oyu Tolgoi copper and gold project.

It could also open the door to other deals for coal and uranium that lie beneath the vast steppes and deserts of the country whose empire under Genghis Khan stretched as far west as Hungary and where many are nomadic herders.

But several smaller parties are more cautious on mining deals that they fear could give away the country's wealth to foreigners, and those groups could be in a key position if there is no clear majority in parliament.

There were still no results from Ulan Bator, typically a Democratic Party stronghold, and a move away from the first-past-the-post system has meant confusion over counting and more difficulty predicting results.

Mongolia's Election Commission said a final result could be expected after 0600 GMT at the earliest, but if there were disputes in some districts it could be much later. (Reporting by Lindsay Beck; Editing by Jerry Norton)