(Updates with details of state of emergency)

By Tito Belo

DILI, Feb 22 (Reuters) - East Timor sent more than 1,000 police and soldiers to search the hills and raid homes on Friday in pursuit of rebels involved in this month's assassination attempts on the country's president and prime minister.

Rebel soldiers attacked Jose Ramos-Horta's home on Feb. 11, seriously wounding the president during a gunfight.

Prime Minister Xanana Gusmao, who escaped unhurt in a separate attack the same morning, ordered the country's military and police forces to form a joint command to arrest followers of rebel leader Alfredo Reinado.

More than 1,000 police officers and soldiers paraded the streets of the capital, Dili, on Friday before embarking on the hunt for rebel soldiers in nearby hills.

"We promise we won't betray the confidence given to us. We promise we will restore peace and stability," military chief Taur Matan Ruak told a news conference.

Arrest warrants have been issued against 17 people suspected of involvement in the attack, including Gastao Salsinha who took command of rebel soldiers after Reinado was killed during the attack on Ramos-Horta.

Later on Friday, parliament approved a proposal by Gusmao to extend a state of emergency -- which was declared soon after the attacks and was due to expire on Saturday -- for a further month.

But some residents in Dili said the state of emergency was making it harder for people to earn a living.

"There's no need to extend it, we are suffering," said one fisherman on the beach.

Asia's youngest nation has been unable to achieve stability since hard-won independence in 2002.

The army tore apart along regional lines in 2006, when about 600 soldiers were sacked, triggering factional violence that killed 37 people and drove 150,000 from their homes.

Foreign troops were sent to restore order in the former Portuguese colony of about one million people, which gained full independence from Indonesia after a U.N.-sponsored vote in 1999 that was marred by violence. (Writing by Adhityani Arga; Editing by Sara Webb and Alex Richardson)

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