INDIO, California (Reuters) - Grammy-winning French indie rock band Phoenix headlined the Coachella Valley Music and Arts festival on Saturday, bringing R&B singer R. Kelly as their special guest on stage amid rumors that French electro duo Daft Punk would join them.

Phoenix's lead singer Thomas Mars, Deck d'Arcy, Laurent Brancowitz and Christian Mazzalai, played a selection of old and new songs against the star-lit backdrop of the festival, held in the desert in Indio, California.

The band, which is due to release its album "Bankrupt!" on April 22, sang new songs "Entertainment" and "The Real Thing". It also serenaded the crowd with favorites from its last album, "Wolfgang Amadeus Phoenix", such as "Lisztomania" and "Fences".

Kelly's appearance came as a surprise to an audience expecting to see Daft Punk after a teaser music video by the electronic group was played at the start of the Yeah Yeah Yeahs' set on Friday.

He joined Phoenix for a mash-up of his hit single "Ignition" with Phoenix's hit "1901".

This is the third time Phoenix has performed at Coachella and its first time headlining the annual three-day event.

"Our vision of Coachella is that you can never be medium. It's either fantastic or a big catastrophe, we don't like medium things. For us, it's always been an extreme experience. The first time we played was our worst show ever, and the second time was one of our best shows ever, it's either a huge failure or success," Mazzalai told Reuters ahead of the band's set.

After the success of the 2009 album "Wolfgang Amadeus Phoenix", which spawned hits such as "1901" and won a Grammy for best alternative music album, Phoenix returned to the studio to record "Bankrupt!".

"We have the album of our dreams and there was no compromising at all. In three years, we grew up and we have a different vision, but we're still the same with having total freedom," Mazzalai said.

"Bankrupt!" was inspired by the idea of "starting from scratch with a clean slate" and led the band to explore new ideas and themes, he said.

DJS GET COACHELLA DANCING

Los Angeles indie electro-rock group The Postal Service warmed up the crowd ahead of The xx and Phoenix's headline slot.

The group, led by Death Cab For A Cutie frontman Ben Gibbard, set a mellow and dream-like vibe as darkness fell over the festival grounds.

British indie pop band The xx pumped up the tempo with tracks such as "Islands" and featured special guest Solange Knowles, sister of singer Beyonce, performing a cover of Aaliyah's "Hot Like Fire."

"It really is a dream come true to be playing the main stage," lead singer Romy Madley-Croft said to the crowd.

While rock acts dominated the Coachella line-up this year, festival organizers made sure to include dance acts to stick with their tradition of providing a stage for the growing influence of electronic dance music.

Baauer, the 23-year-old DJ behind viral YouTube hit "Harlem Shake", performed early on Saturday and made the crowd wait until the end to hear his hit song.

"Harlem Shake" has led to a trend in which people make videos of themselves standing still during the first part of the song before breaking into wild, energetic dancing.

Italian DJ Benny Benassi was one of the highlights at the Coachella dance tent, with the crowd spilling out as they reveled in his dance-floor tracks. British dance act Hot Chip kept the party going with crowd-pleasers including "Over and Over" and "Ready For The Floor".

Rapper 2 Chainz, one of the few R&B and hip hop acts at Coachella this year, performed as did British electro-folk musician Bat for Lashes.

British folk artist Ben Howard played a soft set of songs from his "Every Kingdom" album, while the Dropkick Murphys got the audience dancing with their crowd-rousing Irish rock tracks including "Rose Tattoo".