ABUJA (Reuters) - Nigeria's ruling People's Democratic Party (PDP) held its first meeting chaired by Acting President Goodluck Jonathan on Tuesday after a court overturned an injunction filed by a group of rebel members.

A group of 19 senior PDP members suspended for launching a rebellion against the party leadership had sought a court order to stop the meeting, due to approve the rules for primaries ahead of presidential elections due by early next year.

A court in the capital Abuja overturned the injunction on Tuesday but ruled that the suspended members, who had argued that their interests would not be represented, should not be discussed at the meeting.

The row in the ruling party revolves around disagreement over who its presidential candidate should be and risks dividing a political grouping whose nominee has won every presidential race since Nigeria's return to democracy just over a decade ago.

President Umaru Yar'Adua, who returned from a Saudi hospital in February, remains too sick to rule and is therefore not likely to try to seek a second term.

Hundreds of protesters from rival groups rallied at the PDP's headquarters in Abuja before the meeting.

Around 200 protesters, some carrying signs saying "No to Corrupt Politicians" and "Let Us Reform Now," demanded the resignation of PDP Chairman Vincent Ogbulafor after fraud charges were brought against him on Monday.

A similar-sized counter rally was also held in support of Ogbulafor, whom a court charged alongside four others with conspiring to siphon off $1.5 million in public funds while he was a government minister in 2001.

ABUBAKAR MAY RUN

Ogbulafor said last month the party nominee should be from Yar'Adua's Muslim north, abiding by the terms of an unwritten agreement in the party that power rotates between north and the mostly Christian south every two terms.

But Jonathan, a southerner, has not ruled himself out of the race and some northerners have said they would support him.

Former Vice President Atiku Abubakar, who ran unsuccessfully for president as the opposition Action Congress' (AC) candidate in 2007, said on Tuesday he may also seek to run again but this time on the PDP ticket.

"I will if God permits," he told reporters in the capital Abuja. "The AC alone cannot be a formidable opposition to PDP."

Abubakar, who was the deputy of former president Olusegun Obasanjo, joins former military ruler Ibrahim Babangida in seeking the PDP's presidential nomination.

The party has a strong majority in both houses of parliament and holds over three quarters of Nigeria's 36 states. Its dominance in the last three presidential elections has turned the country into a virtual one-party state, critics say.