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WRAPUP 2-Hong Kong leader to focus on housing, jobs to try to appease protesters

Jessie Pang

protesters@ (Adds airport protest called off, "Matilda the Musical" postponed, paragraphs 11 and 17)

* Hong Kong leader to focus on housing, jobs

* Lantern protests planned for Mid-Autumn Festival

* Women's tennis tournament postponed because of protests

HONG KONG, Sept 13 (Reuters) - Hong Kong leader Carrie Lam promised to prioritise housing and jobs to appease pro-democracy protesters in the Chinese-ruled city after three months of sometimes violent unrest, as scuffles broke out between pro-Beijing and anti-government demonstrators.

Lam, who said she caused "unforgivable havoc" by igniting the crisis and would quit if she had a choice, said in a Facebook post late on Thursday her government would increase the supply of housing, with more policies to be announced.

The spark for the protests that have rocked the Asian financial hub was a now-withdrawn extradition bill and concern Beijing is eroding civil liberties, but many young protesters are also angry at sky-high living costs and a lack of job prospects.

Hong Kong has some of the world's most expensive real estate and many young people say the city's housing policy is unfair, benefiting the rich, while forcing them to live with their parents or rent "shoe box" apartments at exorbitant prices.

Lam's comments come as activists plan the latest in a series of protests in the former British colony, which is grappling with its biggest political crisis in decades.

China has called on its biggest state firms to take a more active role in Hong Kong, including stepping up investment and asserting more control over companies.

The demonstrations started in June in response to a bill that would have allowed people to be sent to mainland China for trial in Communist Party-controlled courts, but have broadened into calls for democracy.

Hong Kong returned to China in 1997 under a "one country, two systems" formula that guarantees freedoms not enjoyed on the mainland, including an independent legal system.

At lunch on Friday, hundreds of pro-Beijing supporters packed into a shopping mall waving China flags and singing the Chinese national anthem.

Later on Friday, Mid-Autumn Festival, demonstrators are set to carry lanterns and form human chains on the scenic Victoria Peak, popular with mainland tour groups, and on Lion Rock, separating the New Territories from the Kowloon peninsula.

Sit-ins at shopping malls are also planned over the weekend. Another "stress test" of links to the airport was called off.

Activists also plan to gather outside the British consulate on Sunday to demand that China honours the Sino-British Joint Declaration that was signed in 1984, laying out the former British colony's post-1997 future.

China says Hong Kong is now its internal affair. It denies meddling in Hong Kong and has accused the United States, Britain and others of fomenting the unrest. Britain says it has a legal responsibility to ensure China abides by its obligations under the Joint Declaration.

Police have responded to violence with tear gas, pepper spray, rubber bullets, water cannon and baton charges, as well as firing several live shots in the air, prompting complaints of excessive force.

On Thursday, Hong Kong's government rejected a warning from a Canadian think tank that the city's position as one of the world's freest economies is threatened by China's "heavy hand".

Hong Kong is facing its first recession in a decade as a result of the protests. Multiple events and conferences have been cancelled and the number of visitors plunged 40 percent in August. The city's premier women's tennis event scheduled for October has been postponed.

Organisers also called off the Royal Shakespeare Company's "Matilda the Musical", due to run from Sept. 20 to Oct. 20.

The Fraser Institute, an independent public policy research organisation, said Hong Kong was one of the most economically free jurisdictions in the world but "interference from China including the violent crackdown on pro-democracy protests - severely threatens Hong Kong's rule of law".

Hong Kong's government said the comments were "entirely ungrounded and not borne out by objective facts", with human rights and freedom fully protected, according to a statement released late on Thursday. (Writing by Farah Master; Editing by Nick Macfie)