UPDATE 1-NZ Prime Minister-elect Ardern focuses on final touches in coalition deal, NZ dlr sinks

deal, NZ dlr sinks@

* PM-elect Ardern will finalise coalition agreement Friday

* Most major Labour policies intact with NZ First deal

* NZ dlr falls to five-month low (Updates market reaction, adds trader quote)

WELLINGTON, Oct 20 (Reuters) - New Zealand Prime Minister-elect Jacinda Ardern said she would spend Friday ironing out issues and ministerial posts with coalition partner New Zealand First, one day after becoming the Pacific nation's youngest leader in more than 150 years.

The previous night's highly anticipated announcement by New Zealand First leader Winston Peters that he would support 37-year-old Ardern's Labour Party had ended a decade of centre-right National rule and spelt big changes for the country's economy.

The New Zealand dollar - the world's 11th-most traded currency - fell as investors grappled with heightened uncertainty and a more protectionist agenda.

The currency dropped 1.7 percent on Thursday, its largest daily loss in more than a year, and then extended its losses to a five-month low of $0.6995 on Friday.

"Clarity is what the market always wants...it's not very clear what their first policies are or even their target policies," said Stuart Ive, Wellington-based dealer at OM Financial.

"The whole time that there's uncertainty it's going to continue to weigh on the New Zealand dollar," he said.

The country's stock market was down 1.1 percent at the Friday open, but later made up those losses.

Ardern told Radio New Zealand on Friday that her party would meet to decide ministerial posts in the afternoon, though it had already offered the deputy prime minister role to Peters and was waiting for his decision.

She confirmed that most of the party's flagship policies, including a ban on some foreign ownership of housing, had survived the negotiations with Peters in recent weeks.

"With New Zealand First we've got a few more details to iron out," Ardern said. "Our plan remains, with a few minor changes ... we're finalising in the next 24 hours the detail of both agreements."

The inconclusive election on Sept. 23 had thrust the country into political limbo for almost a month with neither major party winning enough seats to form a majority and giving New Zealand First the balance of power.

New Zealand First and Labour also needed support from the progressive Green Party, which said it would strike a "confidence and supply" agreement, meaning it was officially outside government but would hold ministerial posts and vote on key pieces of legislation like the budget.

On Thursday evening, Labour said it would also stick to its promises to change the central bank's mandate and seek to renegotiate the Trans-Pacific Partnership trade deal.

Ardern said the parties would release their agreements early next week and an announcement on ministerial posts would come later in the week.

(Reporting by Charlotte Greenfield; Editing by Matthew Lewis and Michael Perry)