Opposition protest accuses Spain of ETA surrender

MADRID, March 10 (Reuters) Tens of thousands of demonstrators gathered at an opposition rally in Madrid today to vent their rage at what they say is the Spanish government's ''surrender'' to Basque separatists ETA.

Angry at a government decision to grant house arrest to a multiple killer from ETA after he fell dangerously ill on hunger strike, protesters waving red and yellow Spanish flags flocked to Madrid's main 12-lane avenue, carrying signs calling on Prime Minister Jose Luis Rodriguez Zapatero to resign.

Under a banner reading, ''Spain for freedom. No more concessions to ETA'', the opposition Popular Party (PP) has billed the protest as the most important demonstration in Spain's 30-year democracy.

It is the first national protest to be organised by the opposition, a further sign, say commentators, that the PP has moved to all-out attack over Zapatero's handling of the Basque conflict -- formerly an area of bipartisan consensus.

The government called off the peace process after ETA shattered a nine-month ceasefire by bombing Madrid airport in late December, killing two people.

''For the first time in 30 years, Spanish society has had to witness giving in to ETA,'' Popular Party leader Mariano Rajoy wrote in Saturday's La Razon newspaper. ''A murderer has succeeded in bending the will of the government of Spain because of the latter's weakness.'' The previous night thousands attended smaller PP protests in regional capitals across Spain and all week senior PP members have attacked Zapatero and attended events such as the laying of flowers where ETA commander Inaki de Juana Chaos killed 12 police in 1986 car bomb attack.

De Juana was moved to a hospital in the Basque Country last week after being chained to a Madrid hospital bed and force fed during a 114-day hunger strike. Once he recovers sufficiently, he will serve the remainder of his 18-month sentence at home.

The government says de Juana would have starved himself to death if he had not been moved, and yesterday Zapatero said his government would not change its mind.

''They (the PP) lie, they raise tensions and they know it,'' Deputy Prime Minister Maria Teresa Fernandez de la Vega told a Socialist party conference today.

PP leaders pounced on an apparent admission by Zapatero earlier in the week that ETA had black-mailed the government over de Juana's transfer, when he said: ''We are not witnessing for the first time a government giving in to blackmail by ETA''.

Opinion polls in both left- and right-leaning newspapers show a slim majority of Spaniards think the government was wrong to grant house arrest to de Juana, who had completed 18 years behind bars for 25 ETA murders in the 1980s.

REUTERS MS PM2141