Taiwan's incumbent Nationalist president had a tiny edge on Saturday in early vote counts from an election that is being closely monitored by China and the United States as they look for stability in the region at a time of political transition.

The elections had been expected to be tight and television stations showed that with about 1 percent of the vote counted, the Nationalist Party's Ma Ying-jeou, 61, who has fostered warmer ties with China, was very slightly ahead of Tsai Ing-wen of the opposition Democratic Progressive Party (DPP).

Voting closed at 4 p.m. local time (0800 GMT). At one polling station in downtown Taipei, staff opened the beige ballot boxes and took out the pink presidential ballot slips, calling out the name of the chosen candidate and stacking the papers in piles for each candidate.

Full results are due later in the day.

Earlier, voters had queued up in orderly lines islandwide after polls opened at 8 a.m. (0000 GMT). The sky was overcast in the capital, but it was relatively balmy, underlining hopes for a high turnout.

I feel calm and hopeful, said Hwang Shiu-mei, a mother of three who was in line to vote at a booth in a Taipei market.

I hope we can see a win-win situation with China in the coming four years. We don't want to see a stalemate and hope for a better economy, along with peace and stabilility.

Both main contestants were confident as they cast their vote early.

I see a little sunshine now, Ma told reporters at his polling station in a Taipei church after a slight drizzle eased.

I'm very happy, I urge everyone to come out early and vote. This weather should help the voting rate.

Asked if he had a restful night, Ma replied, I sleep well every night.

Opposition leader Tsai, casting her ballot at a school in a Taipei suburb, said she was mentally prepared to become the first female president of Taiwan.

I hope we will be able to give you a full explanation after the vote is counted, she said, when pressed for details.

Smooth Vote

Like the run-up to the election, the voting was smooth. Unlike in 1996, when China fired missiles into waters off Taiwan before the island's first direct presidential election, Beijing has learnt to temper any response to avoid antagonizing voters into backing the DPP.

The DPP's independence-leaning stance has long angered Beijing, which deems Taiwan a renegade province and considers U.S. arms sales to the self-ruled island as the top obstacle to improved ties between the United States and China, now the world's two biggest economies.

Tsai has distanced the DPP from the independence stance. But a DPP victory could complicate matters for Chinese President Hu Jintao and other leaders who will hand power to a younger generation later this year and who don't want to jeopardize their legacy of fostering more stable cross-strait ties.

The United States, which holds presidential elections later this year, will also be keen to take a potential irritant in bilateral ties with China off the table.

In Taiwan, besides the presidential election, the 18 million eligible voters will also choose the island's 113-member parliament, currently dominated by the Nationalists, which will be crucial in expediting or stalling future policies.

Most analysts expect a high turnout given the closeness of the race. Nearly 200,000 Taiwanese have returned from overseas for the poll according to local media reports, cramming flights in a last-minute rush to cast ballots.

Ma and Tsai, both former law academics with doctorates from Harvard and the London School of Economics, respectively, held a flurry of rallies and motorcades islandwide on Friday, the final day of campaigning, with Ma focusing on the DPP's largely rural stronghold of the south and Tsai aiming north.

A third candidate, former Nationalist party member James Soong who now leads a splinter party, trails far behind in the polls, but could cloud the result for the Nationalists by siphoning off some of Ma's support.

Some see the election as a referendum on the economic rapprochement with China shepherded by Ma over the last four years, which may have eased decades of animosity and the threat of outright war but also raised fears of an over-reliance on its powerful neighbor.

On the streets, however, bread-and butter issues dominate, especially at a time of global economic uncertainty for export-reliant Taiwan.

We hope the new president can improve the economy, said Hsu Kuo-hsiung, a 49-year-old car mechanic as he polished a black sedan in his garage in a Taipei suburb.

This is most important. If there's no stability, the economy will suffer.

(Editing by Raju Gopalakrishnan)