(Recasts with Kibaki, Odinga comments)

By Daniel Wallis and C. Bryson Hull

NAIROBI, Feb 29 (Reuters) - Kenya's power-sharing deal could be made to work, rival leaders said on Friday, boosting hopes a process of reconciliation would now begin after post-election bloodshed.

Political factions met following the signing by President Mwai Kibaki and his rival Raila Odinga on Thursday of a deal setting up a coalition government.

The two men had come under huge pressure from world powers and Kenya's 36 million people to find a solution to end two months of turmoil and help repair the country's reputation as east Africa's business, tourism and transport centre.

Kibaki said the "process of national reconciliation and healing" had begun, according to his office. He reaffirmed his support for the agreement and "expressed confidence that it would be implemented fully in the interest of all Kenyans".

Odinga said he was confident "that everyone is going to try and ensure that this coalition will work and succeed".

Asked by BBC radio what would happen if it fell through, he said: "In my view that would lead to disintegration of the country."

Kenya's shilling currency hit a 45-day high against the dollar buoyed by positive sentiment on the deal, traders said. Brokers said the main share index rose 3 percent from the end of last week.

"There is certainly a lot of optimism from this, and we hope that towards the end of the second quarter we'll see a return to the levels of foreign interest we were seeing before," said Sunil Sanger, managing director of CFC Financial Services in Nairobi.

'HAPPY NEW YEAR'

Many Kenyans greeted each other with "Happy New Year", a reference to the fact those celebrations were delayed by spasms of violence after Kibaki was sworn in on Dec. 30.

But the optimism was tempered by a recognition that the signing was only a first step and the proof would be in the deal's implementation, due to start when Kenya's often unruly parliament opens on Thursday.

Some Kenyans were less sanguine about the future, and the chances of healing deep ethnic rifts left by the killings of more than 1,000 people and the displacement of 300,000 more.

"Kibaki and Raila have never slept in the cold hungry and this agreement means nothing to us," said Alice Wangui, a woman from the Kikuyu tribe forced to leave her ethnic Luo husband and stay in a refugee camp in the Rift Valley town of Naivasha.

Kenya's parliament is split right down the middle between Kibaki and Odinga's allies.

Under the deal, Odinga becomes executive prime minister -- a job he claims Kibaki promised but failed to give him in exchange for support at the 2002 election -- and the cabinet will be split based on parliamentary representation.

The agreement will enshrine in law those constitutional changes, the first part of a complete overhaul of the document that has guided Kenya for 45 years.

Mediator Kofi Annan, the former U.N. secretary-general, has said the talks will produce lasting solutions to those issues within 12 months. A spokesman for Annan said the two sides resumed discussions on Friday.

John Githongo, who quit as Kenya's first anti-corruption adviser in 2005, told Reuters in London: "It's an extremely positive first development. It averts the immediate threat of violence hanging over Kenya." (Additional reporting by Jack Kimball and George Obulutsa in Nairobi, George Murage in Naivasha and Tsegaye Tadesse in Addis Ababa; Adrian Croft in London; editing by Giles Elgood and Robert Woodward) (For in depth coverage on Reuters Africa Web site: http://africa.reuters.com/elections/kenya/ )

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