CAPE TOWN (Reuters) - The ruling African National Congress will name party deputy head Kgalema Motlanthe as South Africa's caretaker leader after the ousting of President Thabo Mbeki, ANC members of parliament told Reuters on Monday.

ANC leader Jacob Zuma made clear his backing for Motlanthe as he pledged that the party would ensure a smooth transition and economic policy continuity despite the biggest political crisis since the end of apartheid in 1994.

"We have in cabinet many experienced ministers, including the deputy president of the ANC, Kgalema Motlanthe. I'm convinced that if given that responsibility, he would be equal to the task," said Zuma, in his first public remarks since Mbeki announced he would resign in the face of ANC demands to quit.

Motlanthe is a left-leaning intellectual, widely respected by both the radical leftists and business tycoons within the ANC. He is seen as a figure who could help heal the deepest divisions in the party's history.

"He's a very solid person and if you've read his statements he always avoids wild rhetoric. He seems to also avoid making enemies and in the present political climate that's a good thing," said Keith Gottschalk, a political analyst at the University of the Western Cape said.

"Certainly, most would regard him as presidential material."

ANC militants led the charge to force out Mbeki after a judge threw out graft charges against his rival Zuma and suggested there was high-level political meddling in the case.

African National Congress parliament members told Reuters the party would name Motlanthe to replace Mbeki until the poll, expected around April, which the ANC is widely expected to win.

The opposition Democratic Alliance said parliament would elect Mbeki's successor on Thursday.

Motlanthe is a former student activist, a trade unionist and a former soldier in the ANC's disbanded military wing UmKhonto we Sizwe. In 1977 he was sentenced to 10 years imprisonment and was jailed on Robben Island with Nelson Mandela and Zuma under the racist apartheid regime.

ECONOMIC STABILITY

Policy changes under Motlanthe in the short interim period would be unlikely but foreign investors eager for stability and a continuity of policy in Africa's biggest economy will be watching closely for clues on the ANC's future policy.

"In the short term, uncertainty will remain as the new political regime settles in, with some cabinet changes likely in coming weeks," said Mike Davies, Middle East and Africa analyst at Eurasia Group.

Ratings agency Fitch said radical economic policy change was unlikely. But Mbeki's resignation added to political uncertainty.

"The interim president and his or her team will have to carefully manage the transition so as to not worsen already weak investor sentiment and add to macroeconomic risks," said Veronica Kalema, director in Fitch's Africa and Middle East department.

The rand rebounded during Monday's session as the dollar slid against most currencies, having fallen after Mbeki's resignation.

Government bonds gained slightly, partly on receding fears of a turbulent presidential transition. And equities rose alongside higher metals prices with the benchmark Top-40 up 2.1 percent by the close.

Zuma sought again to reassure markets that he will not give in to pressure from leftist union and Communist Party allies to shift away from Mbeki's business-friendly policies if he becomes president in 2009.

Motlanthe's appointment is almost certain to be officially approved by the ANC-dominated assembly.

But Archbishop Desmond Tutu said he was "deeply disturbed" by the ANC's ouster of Mbeki.

"It is good old-fashioned tit-for-tat. Our country deserves better. The way of retribution leads to a banana republic," the Nobel Peace Prize laureate told reporters.

Uncertainty may still deepen if Mbeki supporters split from the ANC and contest elections as a breakaway party in 2009, as media reports suggest they will.

Seeking to ease concerns that an exodus of pro-Mbeki ministers would hurt the country, Zuma said the party wanted all current cabinet ministers to remain in their posts.

That suggests widely respected Finance Minister Trevor Manuel -- a key figure for foreign investors -- will remain.

Manuel indicted on Saturday he will not resign and has repeatedly said he will serve at the request of any president.