Obama speaking to Muslims, shortens Indonesia trip

JAKARTA (Reuters) - President Barack Obama will make a major speech addressed to the Islamic world on Wednesday, before an erupting volcano forces him to make an early departure from the world's largest Muslim-majority nation.

The U.S. leader cut short his long-delayed visit to Indonesia, where he lived for four years as a child, by concern that an ash cloud from the deadly Mount Merapi volcano would prevent his taking off in time to attend a G20 summit in South Korea.

But his curtailed schedule will still allow time for a visit to Jakarta's national Istiqlal Mosque, the largest in southeast Asia, and to make the speech at the University of Indonesia.

Before a crowd of 6,000, Obama will lay out broad themes of the U.S. relationship with Indonesia, as well as Indonesia's example in the world as an emerging democracy, a country working to develop its economy and a majority-Muslim nation that is tolerant of other religions.

"Indonesia can be a positive model in the region and in the world for a developing country embracing democracy," Ben Rhodes, Obama's deputy national security adviser for strategic communications, told a news briefing previewing the speech.

"Indonesia is a pluralistic country. It's a tolerant country, so this is not simply through the vein of one religion, but holding up the way in which Indonesia sets a very positive example through its pluralism," Rhodes said.

The speech had been scheduled to take place at an outdoor venue, but was moved inside at the request of the Indonesian government, which was concerned about the possibility of rainy weather and crowd control.

Obama has been greeted as a returning hero in Indonesia, where he moved with his mother in 1967, a sharp contrast after the heavy blow he received at home in mid-term elections on November 2, when rival Republicans scored big victories over his fellow Democrats.

The visit came after two previously scheduled trips to Indonesia this year were put off by domestic political issues.

ADULATION IN ASIA AFTER BLOWS AT HOME

Indonesia is the second stop on Obama's 10-day, four-country tour of Asia, which ends on November 15. Obama was also received with adulation in India, his first stop, where even critics were charmed by the U.S. leader and especially his wife, first lady Michelle Obama.

Confidence in Obama has dropped in many Muslim nations since he made a first major speech in Cairo in June 2009 reaching out to the Islamic world. The long U.S. wars in Muslim nations Afghanistan and Iraq have lost him support, and the lack of movement on peace negotiations between Israel and the Palestinians has also sapped confidence.

"With respect to outreach to the Muslim world, I think that our efforts have been earnest and sustained. We don't expect that we are going to completely eliminate some of the misunderstandings and mistrust that have developed over a long period of time, but we do think that we're on the right path," Obama said at a joint news conference with Indonesian President Susilo Bambang Yudhoyono on Tuesday.

Obama also had tough words for Israel on its continued building of Jewish settlements in territory claimed by the Palestinians, saying that such activity would not help efforts toward reaching a peaceful two-state solution in the Middle East.

Obama leaves after the speech on Wednesday for Seoul, where he will attend a G20 leaders summit. He later goes to Japan for an Asia-Pacific economic meeting.

The run-up to the G20 has seen tough words between the United States and China.

China kept up a drumbeat of criticism of U.S. easy money policies on Tuesday, warning two days before the G20 economic summit that Washington could destabilize the global economy.

"We still have a lot of work to do ... one of the key steps is putting in place additional tools to encourage balanced and sustainable growth," Obama said at the press conference. He said some countries were intervening in currency markets to maintain an advantage, without naming names.

Obama said G20 progress would not happen "all at once" and the U.S. was not looking to contain China.

"We want China to succeed and prosper. It's good for the United States if China continues on the path of development that it is on," he said.

(Editing by David Fox)