By Nick Tattersall and Tulay Karadeniz
ANKARA (Reuters) - Turkish president-elect Tayyip Erdogan began the process of picking his successor as prime minister on Monday, a figure he hopes will triumph in next year's general election and secure his goal of forging a powerful presidency.
Erdogan's victory in the country's first direct ballot for the head of state on Sunday marks a turning point for Turkey, taking the European Union candidate nation and NATO member a step closer to the presidential system he has long coveted.
But it will be a turbulent journey, demanding a stronger parliamentary majority for his AK Party and the support of the next prime minister if he is to push through the constitutional changes needed to create the beefed-up role.
"Today is a new day, a milestone for Turkey, the birthday of Turkey, of its rebirth from the ashes," Erdogan, 60, told thousands of supporters in a victory speech from the balcony of the AK Party headquarters in Ankara late on Sunday.
Opponents fear an increasingly authoritarian state.
Erdogan chaired a meeting of the party's highest decision-making board on Monday, the first step in a process that will culminate with the naming of his replacement as prime minister once he is inaugurated as president on Aug. 28.
The AK Party will hold an extraordinary convention on Aug. 27, party spokesman Huseyin Celik said, at which it will agree on a new party leader, a figure Erdogan is then expected to ask to form a new government.
He will want a staunch loyalist to fill the role. Unable to campaign for the AK Party once he becomes president, he needs a figure with enough grass roots support to mobilize voters and ensure a stronger majority in parliamentary polls next June.
"This is the first step of this long-term presidential agenda," Sinan Ulgen, head of the Istanbul-based Centre for Economic and Foreign Policy Studies, said of Erdogan's victory on Sunday.
"It is going to be a hugely difficult and uphill battle, even for an immensely successful and astute politician like Erdogan," he said.
Investors initially welcomed Erdogan's triumph on hopes that it would ensure continuity after nearly 12 years of AK Party rule. But the mood later soured, as thoughts turned to the political uncertainty that lies ahead.
"Political tension is likely to remain high as Erdogan seeks to extend the power of the presidency," credit rating agency Fitch said in a statement, saying Turkey's policy coherence and credibility were already weaker than peers.
Erdogan took around 52 percent of the vote on Sunday, a narrower margin than polls had suggested, although he was still 13 points ahead of his closest rival, avoiding the need for a second-round runoff.
Erdogan has vowed to exercise the full powers granted to the presidency under current laws, unlike predecessors who played a mainly ceremonial role. But he has made no secret of his plans to change the constitution and forge an executive presidency.
"I want to underline that I will be the president of all 77 million people, not only those who voted for me. I will be a president who works for the flag, for the country, for the people," he said in his victory speech.
The electoral map suggested that might not be easy.
While the expanses of the conservative Anatolian heartlands voted overwhelmingly for Erdogan, the more liberal western Aegean and Mediterranean coastal fringe was dominated by main opposition candidate Ekmeleddin Ihsanoglu, and the southeastern corner by Kurdish candidate Selahattin Demirtas.
"Erdogan has won now, but within the AKP it isn’t all a bed of roses," said former culture minister Ertugrul Gunay, who resigned from the party last December after policy disagreements with Erdogan.
He said the absolute number of votes won by Erdogan on Sunday had fallen short of the number won by the AK Party at March local elections and of its 2011 general election showing.
"Erdogan knows that the party’s votes have stagnated. That is why he might select a prime minister who will protect the unity of the party ... which will be a compromise."
Senior AK officials say Foreign Minister Ahmet Davutoglu, who has strong support within the party bureaucracy and has been Erdogan's right-hand man internationally, is the top choice to succeed him, although former transport minister Binali Yildirim is also trying to position himself for the job.
President Abdullah Gul, long seen as a potential future prime minister, on Monday signaled a return to politics after his term expires on Aug. 28, saying he would play a role in the ruling AK Party he co-founded with Erdogan.
Gul could not become prime minister immediately as he is not currently a member of parliament, but his role could change after parliamentary elections due in 2015.
Turkey has emerged as a regional economic force under Erdogan, who has ridden a wave of religiously conservative support to transform the secular republic founded by Mustafa Kemal Ataturk on the ruins of the Ottoman empire in 1923.
But his critics warn that a President Erdogan, with his roots in political Islam and intolerance of dissent, would lead Turkey further away from Ataturk's secular ideals.
Few investors had doubted the outcome of Sunday's vote.
"This was more of a coronation than an election, with the result preordained quite some time ago," said Nicholas Spiro, managing director of London-based Spiro Sovereign Strategy.
But in the long term, there are concerns about concentration of power in the hands of a sometimes impulsive leader.
"He called the shots as premier and he will keep calling the shots as president," Spiro said.
(Additional reporting by Seda Sezer, Ayla Jean Yackley and Daren Butler in Istanbul, Selin Bucak, Orhan Coskun and Gulsen Solaker in Ankara, Alexandra Hudson in Berlin; Writing by Nick Tattersall; Editing by Eric Walsh and Andrew Heavens)