MANAGUA, July 11 (Reuters) - With the raising of the golden arches alongside the Nicaraguan flag, a McDonald's fast food outlet opened in Managua on Saturday, 18 years after civil war forced the U.S. corporation to pull out.

Families who waited in line to be the first served welcomed the $1.5 million eatery as a new dining option. Policy makers, meanwhile, hailed McDonald's return as a signal - especially to investors - that this developing nation had entered the global economy.

"Investors come here and if they see that big "M" they know we're not still wearing loincloths," Nicaraguan Vice President Enrique Bolanos said at a Thursday night ribbon-cutting.

The new addition to Managua's skyline is hard to miss. The steel and plexiglass golden arches stand 60 feet high (20 metres), dwarfing statues of Gueguense Indian warriors in an adjoining plaza.

U.S. Ambassador Lino Gutierrez agreed that McDonald's arrival reflected a more stable investment climate and a new political era.

"It's better than a Lada sign," he said, referring to the Russian automobile still found in Nicaragua, a legacy of the previous decade's Soviet-backed Sandinista regime.

Nicaragua's conversion from a centralized to a market- oriented economy has been under way since the Sandinista regime ended in 1990. Foreign investment reached an estimated $133 million in 1997, about one-third from U.S. firms, according to the U.S. Embassy in Managua.

Managua franchise owner Ivania Saballos, the daughter of McDonald's original licensee in Nicaragua who operated a restaurant from 1975 until 1980, called the opening the rebirth of a "cherished dream."

Her father, Ivan Saballos, asked McDonald's to suspend his license after the U.S.-backed Contra insurgency against Sandinistas began in 1980. When McDonald's approached him about reactivating the franchise recently, he handed it over to his daughter, she said.

McDonald's said it plans to open two more fast-food outlets in Nicaragua by the end of this year.

The corporation operates nearly 1,000 outlets in Latin America and they generated more than $1.5 billion in sales in 1997. Last year it announced plans to invest more than $1.5 billion in Latin America and double its presence to 2,000 restaurants by 2001.