E.Timor's Gusmao sworn in under shadow of violence

DILI, Aug 8 (Reuters) Independence hero and former president Xanana Gusmao was sworn in as East Timor's prime minister today as simmering violence continued in some districts loyal to the former ruling party.

Breaking a deadlock after parliamentary polls more than a month ago, President Jose Ramos-Horta on Monday appointed Gusmao's coalition to govern after no single party won a majority.

Ramos-Horta's decision sparked violent protests by supporters of the former ruling party, Fretilin, which claims the right to govern and has branded the president's move as unconstitutional.

Gusmao took his oath at a ceremony in the capital, Dili.

''I will serve the nation based on laws and the constitution with all my capacity for the people, prosperity, consolidating independence and national unity,'' the bearded fighter-turned-politician said as he placed his hand on the constitution.

The new government consists of 12 ministers. Fretilin's Jose Luis Guterres, a former foreign minister, was appointed deputy prime minister.

Police said fresh violence broke out in the district of Baucau and Viqueque today.

A Fretilin supporter in Baucau was shot and wounded by a gunman believed to be a backer of the new prime minister, local police chief Pedro Belo told Reuters.

Meanwhile, Fretilin supporters attacked at least 15 houses in Viqueque, national police operations chief Mateus Fernandes said.

''We have difficulty because we have limited numbers of personnel,'' Fernandes said by telephone.

He said 45 people were arrested in Baucau.

There were no reports of violence in the capital, where youths burned tyres and vandalised buildings a day earlier.

Factional bloodshed broke out in the impoverished country of about 1 million people last year, forcing tens of thousands to flee their homes.

The mayhem, during which 37 people were killed, was triggered by the previous government's decision to sack 600 soldiers.

Fretilin won 21 seats in the 65-member parliament in the June poll, while the National Congress for Timorese Reconstruction (CNRT) took 18 seats. Gusmao founded CNRT earlier this year.

Fretilin, which spearheaded the fight against Indonesia's 24-year rule, claimed the right to form a government because it won most votes in the polls. But CNRT declared a coalition with smaller parties to form a majority.

Fretilin has threatened to boycott parliament and the government if Gusmao's coalition takes power.

Gusmao, who battled Indonesian forces in the hills for years before being captured, appears to have become increasingly frustrated by the pace of progress under Fretilin since independence five years ago.

REUTERS SG DS1416