(Adds one dead, injuries, paragraphs 2-3, soldier comment)

By Saliou Samb

CONAKRY, May 4 (Reuters) - Soldiers in Guinea demanding higher wages fired volleys of shots in the air, raining bullets onto the homes of terrified residents in several garrison cities as an army pay protest escalated, witnesses said on Friday.

At least one person was killed after being hit in the head by a bullet and another 20 were injured in the southeastern town of N'Zerekore, while one of Conakry's main hospitals said it had received 18 people hit by stray bullets overnight.

"Since this morning we've been operating flat out. All of these are people who were hit by bullets," a doctor at the Donka hospital in Conakry told Reuters.

The protests, which began late on Wednesday in major barracks in the capital Conakry and in Kindia, spread to garrisons in at least three other cities -- Labe, Kankan and N'Zerekore -- in the world's leading exporter of bauxite.

The unrest in the West African nation's fractious military poses a challenge to the authority of Prime Minister Lansana Kouyate's new government, which was formed in the wake of violent strikes that rocked the country in January and February.

Officials say 137 people were killed in the violence earlier this year, when soldiers and police quelled protests. The strikes were led by union leaders who said President Lansana Conte, a reclusive diabetic in his 70s, was unfit to rule.

Conte has relied on the armed forces to bolster his autocratic rule since seizing power in a 1984 coup but the relationship has not always been smooth.

His palace was bombarded during a 1996 mutiny to demand higher pay in which the army brought tanks onto the streets. The latest protests centre on demands for an increase in pay grades and back-payment of a March salary hike.

"Since 1996 we've been fooled. We want to be paid our money," one junior army officer told Reuters.

SLEEPLESS NIGHTS

Inhabitants of several garrison towns spent a sleepless night as nearby barracks resounded to the sound of automatic weapons being fired into the air.

"There was firing all night, we couldn't sleep. This morning, soldiers who are billeted in neighbourhoods continued firing," said one resident of Kankan in eastern Guinea.

On Wednesday night, the army protesters went on the rampage at the Keme Bourema barracks of the bauxite mining town of Kindia, 135 km (85 miles) northeast of Conakry.

They fired into the air, ransacked weapons and food stores, and looted the Kindia home of armed forces chief of staff Kerfala Camara.

The main Alpha Yaya Diallo barracks in Conakry has also seen two nights of shooting.

Guinean security forces have been sharply criticised by human rights groups which accuse them of murdering, robbing and raping civilians during the military crackdown earlier this year that quelled the strike protests in the former French colony.

Military commanders have met government leaders to discuss ways of resolving the dispute but diplomats question how long the army, riven by generational and ethnic divisions, will remain loyal to Conte.

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