UPDATE 1-At least 11 die in stormy Madagascar protests

(adds analyst, background)

By Alain Iloniaina

ANTANANARIVO, Jan 26 (Reuters) - Tens of thousands of angry anti-government protesters took to the streets of the Malagasy capital on Monday, burning the state-owned TV and radio station, and a security source said at least two people were killed.

The chaotic scenes seemed sure to dent the government's efforts to present the Indian Ocean island as a safe place for foreign investment, especially in the mining, tourism and oil sectors.

"We know of two deaths," the security source said, telling Reuters a policeman and a 14-year-old had been killed during the angry demonstrations calling for President Marc Ravalomanana's government to resign.

Local journalist Fano Rakopondrazaka said 11 people had died during the chaos on the streets. "I saw 11 dead men. They were looters crushed in a stampede," he told Reuters from the scene.

That could not be independently confirmed.

The violence broke out on the first day of strikes called by the opposition against Ravalomanana, who has been in power since 2002 and who opposition parties say is increasingly autocratic.

The strike call followed the government's closure of a private television station owned by the capital's maverick 34-year-old mayor and opposition leader, Andry Rajoelina.

Authorities shut the station last month after it broadcast remarks by the exiled former president, Didier Ratsiraka. The government deemed the remarks likely to incite civil disorder.

FOREIGN FIRMS

Major foreign companies involved in Madagascar include Rio Tinto (RIO.L) and Sherritt International (S.TO) which plan to extract nickel, cobalt, bauxite and ilmenite.

Gemstones are already a big industry and exploration companies are looking for oil, gold, coal, chromium, platinum and uranium.

The government has accused Rajoelina of stirring up a revolt and called for calm and order across the capital Antananarivo.

"All this is the response of a population facing economic difficulties and an absence of democracy," one demonstrator told Reuters as flames billowed out of a supermarket behind him.

Witnesses told Reuters that angry youths looted shops and burned buildings belonging to the local radio and national television stations.

Elsewhere in the capital, a mob ransacked the house of a senator closely allied to Ravalomanana, and protesters attacked three stores and other business interests of the prime minister.

Relations between the government and opposition have deteriorated rapidly in recent weeks.

The authorities accuse the mayor of running the capital poorly, while the mayor alleges he is being deliberately obstructed from doing his job properly.

Jean Eric Rakotoarisoa, a constitutional law lecturer at the University of Antananarivo, told Reuters the riots could be the start of a major political crisis in Madagascar, the world's fourth largest island with a population of 19 million.

"The closure of Viva TV was the final straw. Beyond that, there is a deep crisis within Malagasy society, created by growing hardships and diminishing purchasing power," he added.

Madagascar has a long history of political instability.

In December 2001, both Ravalomanana and his predecessor Didier Ratsiraka, head of state for 26 years, claimed victory in presidential elections.

Eight months of political spats and sporadic violence ensued before the High Constitutional Court upheld Ravalomanana's victory and Ratsiraka fled to France where he remains in exile. (Writing by Richard Lough; editing by Wangui Kanina, Andrew Cawthorne and Tim Pearce)