By Olzhas Auyezov
ALMATY (Reuters) - Kazakhstan's President Nursultan Nazarbayev unexpectedly resigned on Tuesday after three decades in power, in what appeared to be the first step in a choreographed political transition that will see him retain considerable sway.
Known as "Papa" to many Kazakhs, the 78-year-old former steel worker and Communist party apparatchik has ruled the vast oil and gas-rich Central Asian nation since 1989, when it was still part of the Soviet Union.
Bestowed by parliament with the official title of "The Leader of the Nation", he was the last Soviet-era leader still in office and oversaw extensive market reforms while remaining widely popular in his country of 18 million people.
"I have taken a decision, which was not easy for me, to resign as president," Nazarbayev said in a nationwide TV address, flanked by his country's blue and yellow flags, before signing a decree terminating his powers from March 20.
"As the founder of the independent Kazakh state I see my task now in facilitating the rise of a new generation of leaders who will continue the reforms that are under way in the country."
But Nazarbayev, a close ally of Russian President Vladimir Putin, said he would retain key security council and party leader positions and hand over the presidency to a loyal ally for the rest of his term, which ends in April 2020.
Kassym-Jomart Tokayev, speaker of the upper house of parliament, will take over as Kazakhstan's acting president for the remainder of his term in line with the constitution, Nazarbayev said.
Nazarbayev has no apparent long-term successor. His decision hit the price of Kazakh bonds, while the London-listed shares of Kazakhstan's biggest bank, Halyk Bank, tumbled 5 percent. The news also appeared to weigh on the Russian rouble. Moscow is Kazakhstan's main trade partner.
The Kremlin said Nazarbayev and Putin had spoken by phone earlier on Tuesday, but declined to disclose the content of their conversation.
Valentina Matvienko, the speaker of the upper house of the Russian parliament and a close Putin ally, said Nazarbayev's resignation was unexpected and very serious, the RIA news agency reported.
"He still retains his other high-ranking position, and he will continue to some extent to oversee things, so it is not like he has cut the cord totally - he still has his fingers in the pie," said Theodor Kirschner of Capitulum Asset Management in Berlin.
"That a 78-year-old won't be sticking around forever shouldn't be such a surprise to anyone, and this move makes the transition smoother. This doesn't really give us a headache."
Nazarbayev, who helped attract tens of billions of dollars from foreign energy companies and more than tripled Kazakh oil output, said he would continue to chair the Security Council and remain leader of the Nur Otan party which dominates parliament.
The new acting president, 65-year-old Tokayev, is a Moscow-educated career diplomat fluent in Kazakh, Russian, English and Chinese who has previously served as Kazakhstan's foreign minister and prime minister.
Kazakhstan is scheduled to hold both presidential and parliamentary elections next year.
Nazarbayev steered his nation, which is the world's ninth-largest by area and five times the size of France, to independence from Moscow in 1991. He won 97.7 percent of the vote in the last presidential election in 2015.
International observers have long judged elections in Kazakhstan to be neither free nor fair.
Nazarbayev tolerated no dissent or opposition and was criticized by rights groups who accused him of locking up his critics and muzzling the media, allegations he denied.
In recent months Nazarbayev's government pushed through a number of popular policies - including raising public-sector salaries and forcing utilities to cut and freeze tariffs - stoking speculation that he was preparing for a re-election bid.
(Additional reporting by Karin Strohecker in London; Writing by Olzhas Auyezov/Andrew Osborn; Editing by Gareth Jones)