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UPDATE 2-Ukraine protesters urge general strike as markets hit currency

Monday, 2 Dec 2013 | 11:13 AM ET

(Adds Putin, central bank chief, market troubles)

Government employees turned away

* Opposition presses for government to go

* Protests follow big pro-Europe rally

By Natalia Zinets and Richard Balmforth

KIEV, Dec 2 (Reuters) - Ukrainian protesters blockaded the main government building on Monday, seeking to force President Viktor Yanukovich from office with a general strike after hundreds of thousands demonstrated against his decision to abandon an EU integration pact.

Demonstrations on Saturday and Sunday, which saw violent clashes with the police, drew as many as 350,000 people, the biggest public rally in the ex-Soviet state since the "Orange revolution" against sleaze and electoral fraud nine years ago.

Yanukovich's decision to abandon a trade pact with the European Union and instead seek closer economic ties with Russia has stirred deep passions in a country where many people yearn to join the European mainstream and escape Moscow's orbit.

The resulting unrest has hammered Ukraine's financial markets, underlining the fragile state of the economy.

The central bank was forced to intervene to prop up the hryvnia and threatened more action, underlining Kiev's vulnerability as it seeks more than $17 billion next year to meet gas bills and debt repayments.

Russian president Vladimir Putin blamed "outside actors" for the protests, which he said amounted to an attempt to unsettle Ukraine's legitimate rulers.

"We have no other choice but to defend ourselves and the gains we have made," said Taras Revunets, a protester at Kiev's city hall, which hundreds of demonstrators occupied on Sunday and have turned into an operational hub.

With many people worried that the unrest could endanger their savings, the central bank sought to head off a rush of panic withdrawals.

In a video statement, its chairman said the bank would not introduce any financial restrictions. "I urge everyone to have confidence in the banking system and maintain their savings," said Ihor Sorkin.

Ukraine is divided between those who see stability in close ties with Russia and those who look westwards and see a more prosperous future with the European Union. Since election in February 2010, Yanukovich has sought to straddle the divide, reassuring Ukrainians he could pursue close ties with Europe while managing relations with Moscow.

Even some supporters were shocked by the abruptness with which his government announced it was suspending work on a long-awaited pact with the EU in favour of reviving economic ties with Russia. Scenes over the weekend of police beating demonstrators hardened opinion against him.

"Yanukovich will do whatever Putin tells him to do," said Oleksander, 49, on Kiev's Independence Square, where protesters are establishing tented camps to dig in for a long campaign.

"He's been losing his legitimacy for a long time. His decision to send police in to beat up children was the last straw," said Oleksander, adding he had voted for Yanukovich in the past and had joined the president's Party of the Regions.

Thousands of protesters listened to music and strolled through the city centre on Monday behind makeshift barricades they had erected overnight from city benches, commandeered police barriers and parts of a giant artificial Christmas tree.

Traffic was cut off in central Kiev but pedestrians still shopped and walked to work. Opposition figures made speeches at a central stage erected across from Independence Square. Orthodox Christian priests said prayers for the injured.

Police, who clashed with protesters at several spots around Independence Square at the weekend, have since withdrawn and were little in evidence in the city centre on Monday.

On Sunday, riot police had used tear gas, stun grenades and batons to disperse crowds in clashes near the main presidential administration building and battled masked protesters trying to pull down a monument to Soviet state founder Vladimir Lenin.

GENERAL STRIKE

Yanukovich's government struggled to show on Monday that it was still functioning, with protesters blocking the approach road to the main government building with trash bins and other obstacles and many employees turned back home.

Former interior minister Yuri Lutsenko, now an opposition figure, said: "What is happening now around the government building is a strike."

The National Bank and the finance and economy ministries were functioning, their press services said. City authorities, whose central premises were still in the hands of protesters, said basic services including public transport and hospitals were working normally in the city of three million.

Ukraine's debt insurance costs surged to the highest in more than two months. Its dollar bonds tumbled.

There was no immediate word from Yanukovich, who was due to leave on an official visit to China on Tuesday. His press service said employees at his administration were working normally but declined to say where he was.

A spokesman for Prime Minister Mykola Azarov said employees were not able to enter the main government building in Kiev and negotiations were under way to get them in. Azarov had not yet arrived at his desk.

Azarov's deputy, Serhiy Arbuzov, later appeared at a meeting with a parliamentary committee, saying: "I'm here to show the government is working."

At the insistence of the opposition, parliament is scheduled on Tuesday to consider calls for the resignation of the government, and the sacking and prosecution of the interior minister blamed by the opposition for the police crackdown.

The huge turnout at demonstrations has given a jolt of confidence to opposition leaders, including heavyweight boxing champion turned politician Vitaly Klitschko.

"If this government does not want to fulfil the will of the people, then there will be no such government. There will be no such president. There will be a new government and a new president," Klitschko said on Sunday.

Yanukovich's camp said the opposition overplayed its hand.

"The leaders of the opposition want to use the situation which has boiled up in the country for their own narrow political ends," said Oleksander Yefremov, the head of the pro-Yanukovich faction in parliament. "They think their shining moment has come. I think that's not the case."

It was difficult to evaluate how much support the opposition's call for a general strike was receiving.

Alexei Ostrovsky, 36, who works in advertising but went to the protests instead of to work, said: "I decided I have to be here. I think my bosses will understand that and don't fire me. Annoyingly my company is still working. But I understand them ... they have to feed their families."

In Lviv, Ukraine's second city known for its pro-European outlook, authorities said those striking were mainly private businesses and students. The strike call was not having an impact on regional industry or public transport, they said.

(Additional reporting by Pavel Polityuk and Thomas Grove; Editing by Giles Elgood)