(Adds Guterres conceding and Indonesian reaction)

By Ahmad Pathoni

DILI, May 11 (Reuters) - Nobel peace prize winner Jose Ramos-Horta won nearly 70 percent of the votes in East Timor's presidential run-off, officials said on Friday, raising hopes his strong mandate can bring greater stability to the tiny nation.

European Union monitors endorsed the election, but the result still needs to be signed off by the country's court of appeal.

The mood in the capital appeared calm on Friday, with no sign of celebrations or protests in a nation still struggling to heal divisions five years after it won independence from Indonesia. Ramos-Horta urged supporters of his election opponent Francisco Guterres, a former guerrilla fighter and president of the ruling Fretilin party, to be calm.

"I appeal to Fretilin members so that they don't feel that they have lost. I have said it is the people that have won, it is democracy that has won," the 57-year-old, who is currently prime minister, told reporters at the government building.

EU poll observers commended the way Wednesday's election was carried out, after the first round a month ago was marred by complaints of widespread irregularities.

Guterres conceded defeat and at a news conference also urged his supporters to accept the result.

"I want to give congratulations to Dr. Ramos-Horta for his win in the election and he will become a good president."

Indonesia, which annexed East Timor in 1975 after long-time colonial power Portugal had set it free, said it would send a delegation for the inauguration of the president.

"We are confident that we'll be able to maintain a good and constructive relationship," Dino Patti Djalal, a spokesman for President Susilo Bambang Yudhoyono, told reporters in Jakarta.

SPEED UP ECONOMIC DEVELOPMENT

Ramos-Horta and Guterres won the most votes in the first round of eight candidates, but neither had a clear majority, forcing the extra round.

All votes had now been counted at the district level, although some ballots were still on their way to Dili, election commission spokeswoman Maria Angelina Sarmento said.

Ramos-Horta won 69 percent, while Guterres got 31 percent.

The grey-haired Ramos-Horta, widely viewed as more friendly to the West, has pledged to work closely with the international community and speed up economic development.

East Timor is rich in energy resources such as natural gas but is only beginning to exploit them. In the meantime, many of its million people are unemployed and most are poor.

"Ramos-Horta is expected to bring stability to the country," said political analyst Julio Thomas.

"He is expected to be able to work with different institutions to solve various problems including the issue of Alfredo Reinado," added Thomas of the University of Timor Leste.

Reinado is a fugitive army renegade who enjoys support among the young from the country's west, who feel disenfranchised.

Last August, Reinado escaped from a prison where he was being held on charges of involvement in a wave of violence a year ago which killed 37 people and drove 150,000 from their homes.

In a move seen by some as a bid for wider support, Ramos-Horta appears to have softened his line on Reinado.

Outgoing President Xanana Gusmao will now run for the more hands-on post of prime minister in parliamentary polls on June 30. (Additional reporting by Telly Nathalia and Tito Belo in Dili and Muklis Ali in Jakarta)

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