By Charles Matsebula

MBABANE, Sept 6 (Reuters) - Swaziland, one of the world's last absolute monarchies, held a multi-million dollar celebration of the king's 40th birthday and its 40th year of independence on Saturday after rare protests over poverty.

While many of King Mswati III's subjects say he deserves to be honoured, the so-called 40-40 celebrations highlighted growing frustrations in the landlocked mountain kingdom.

On Thursday, demonstrators stoned shops, looted a market and set off an explosion, damaging a bus, as a second day of calls for democratic reform and more social spending turned violent.

"I'm totally against it (the 40-40 celebrations). It could have been a celebration but without spending a lot of money. We are considered as the poorest of the poorest countries," said Nomalungelo Mkhwanazi, a woman in her fifties.

The event carried a price tag of about $10 million, including 20 luxury cars purchased to transport visiting heads of state, organisers say.

Mswati arrived at Swaziland's Somhlolo national soccer stadium in traditional dress standing in an open-top black car waving to the crowd.

"We are telling a world full of turbulence that we are a happy nation in spite of the challenges that we may face," he told a crowd of about 50,000 people.

Swaziland, which won independence from Britain in 1968, is due to hold a parliamentary election on Sept. 19 despite the opposition being effectively banned by royal decree since 1973.

Mswati introduced a new parliamentary system in 1993 where citizens were allowed to vote for the first time to choose national assembly candidates. The king introduced a new constitution in 2006, but he still controls the legislature.

EXTRAVAGANCE, POVERTY

Mswati, listed as the world's 15th richest monarch by Forbes magazine, has courted controversy with a lavish lifestyle while two-thirds of Swazis live in poverty. Unemployment is 40 percent and the prevalence of HIV among adults is the world's highest.

Hundreds of Swazi women held a protest last month after several of royal wives chartered a plane along with their maids and bodyguards for a shopping spree in the Middle East.

Nevertheless, many of Swaziland's 1.1 million people, mostly subsistence farmers, admire their king.

Among them are the tens of thousands of bare-breasted virgins who competed for his eye on Monday in a traditional Reed Dance, in which he chooses a new wife. He has at least 13.

"He's the king, he should do whatever he wants to do with the money. He is in charge of everything in the country," said Phumlile Dlamini, 18, a student in the Reed Dance.

Many of those same maidens flooded into the stadium on Saturday to show their respect for the monarch.

Several African leaders were on hand.

Zimbabwean President Robert Mugabe, whose countrymen are suffering from chronic food and fuel shortages, received the loudest applause from assembled citizens and heads of state.

(Additional reporting by Phakamisa Ndzamela)

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