JOHANNESBURG - South Africa's ruling ANC must move quickly to reassure investors after Jacob Zuma's election as party leader raised new uncertainty and concern about future fiscal policies, economists said on Wednesday.

Zuma ousted President Thabo Mbeki from the top of the ANC after a grassroots revolt spearheaded by left-wing trade unions, the Communist Party and young militants.

This has unnerved investors who fear the ANC may veer to the left and abandon economic policies which have led to nine straight years of expansion in Africa's biggest economy.

Investors are also worried about unresolved corruption charges against Zuma and the split between the country's two most powerful jobs until 2009, when Zuma is expected to succeed Mbeki as president. They fear this could cause policy paralysis.

"We expect a lengthy period of political noise and uncertainty in South Africa, characterised by tensions within the ANC and between the party and the government," investment bank Goldman Sachs said in a research note.

Market reaction to Zuma's election as party leader was muted and traders said it had already been priced in across all South African asset classes.

The battle between the two rivals has created the worst ever rift in the party, which has ruled South Africa since apartheid ended nearly 14 years ago.

HEAL THE RIFT

Economists said investors were looking for a firm ANC commitment to current economic policies. Investors with a longer-term view wanted to know if key government financial leaders will remain in place.

"Whatever happens the immediate task ahead of the ANC is to heal the recent rift, and underscore once again a firm commitment to market principles," said Razia Khan, Standard Chartered regional head of research for Africa in London.

"Failure to do so, in light of the uncertainty that lies ahead, could elicit a stronger negative reaction than we have yet seen," she said.

ANC officials, including the party's new deputy president Kgalema Motlanthe, have said there will be no shift in the party's economic policy and no payback to unions for their support of Zuma.

Other top officials, including Finance Minister Trevor Manuel and central bank Governor Tito Mboweni, have said in the past that South Africa would continue on its economic path regardless of who ended up in the ANC's top post.

Zuma, viewed as a moderate when he served as deputy president in Mbeki's government, has given no clear indications what his economic policies would be as leader of the country.

But he has met foreign investors to reassure them that not much will change.

Reinhard Cluse, senior Europe, Middle-East and Africa economist at UBS bank in London, said one investor concern is about Zuma's ability to break free from his backers.

"You need to figure out how independent Zuma will be. Will he be the slave of the people that have been backing him? Will he have to deliver on their ideas and their interests or can he free himself from these influences and do what is really best for the economy and the country?".