ISTANBUL, July 3 (Reuters) - A shadowy, ultra-nationalist illegal organisation planned a gradual coup to unseat the Turkish government, documents seized in recent raids showed, newspaper Sabah said on Thursday.

Police arrested 21 people on Tuesday, including two retired generals and several other retired army officers, for suspected links to the so-called Ergenekon group, shaking Turkish financial markets and increasin political tensions.

Seized documents detailed a secret plan to undermine public confidence in the ruling AK Party and its handling of the economy to ultimately force the military to intervene, Sabah said. Yeni Safak, a newspaper with close ties to the government, published similar reports.

The AK Party is the most popular party in Turkey, according to opinion polls. It won a landslide re-election last year despite efforts by the powerful secularist elite to portray the party as Islamist.

The secularist elite, which include army generals and judges, accuse the AK Party of seeking to bring religion back into public life. Turkey is an officially secular country but predominantly Muslim.

The AK Party denies the charges and point to their record in office as proof. The governing party is currently on trial for alleged Islamist activities and if it loses the case it could be closed down, possibly forcing an early parliamentary election.

Sabah, which has close ties with the government, said Ergenekon planned to start illegal demonstrations on July 7 in 40 provinces with the aim of sparking clashes with the security forces.

The group also intended to campaign to show that the Turkish economy, which has begun to slow after several years of stellar growth, was declining sharply.

Turkey has had four military coups in the last 50 years. The most recent was a 1997 'soft coup', when the generals edged from power a government they considered Islamist using public and behind-the-scenes pressure. (Reporting by Thomas Grove; Editing by Richard Balmforth)

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