By Nadim Ladki

BEIRUT, May 8 (Reuters) - Iranian-backed Hezbollah tightened its grip around Beirut airport on Thursday, the second day of a protest campaign against Lebanon's U.S.-backed government that has sparked gun battles in the city.

The airport, the country's sole aerial link to the outside world, faced closure and the national carrier Middle East Airlines suspended all departures for 12 hours until midday (0900 GMT) "to await positive developments".

Hezbollah supporters and fellow Shi'ite allies blocked all roads leading to the airport and several other main streets in the capital on Wednesday, prompting sporadic gun battles with pro-government loyalists and escalating the worst internal crisis since the 1975-90 civil war.

An opposition source said the protest campaign would continue until the government rescinded decisions affecting Hezbollah, including a move to take steps against a telecommunications network operated by the group. Government sources ruled that out.

Hezbollah, a Shi'ite Muslim group backed by Syria and Iran, has led a 17-month-long political campaign against Prime Minister Fouad Siniora's anti-Syrian cabinet. Friction has already led to bouts of lethal violence.

Wednesday's events quickly took a sectarian tone with clashes in mixed Shi'ite and Sunni neighbourhoods that left at least 10 people wounded. Scores of gunmen from both sides were seen in several areas.

Sunni Mufti Sheikh Mohammad Rachid Kabbani denounced the actions of "outlawed armed gangs" in Beirut and said Hezbollah had now transformed itself from a resistance movement to an armed force to occupy Beirut.

"The Sunni Muslims in Lebanon are fed up," he said in a televised address to the Lebanese. "I appeal to the leadership of Hezbollah from my national and religious position to take the initiative and withdraw the gunmen from Beirut."

Siniora told Future News television his government was considering declaring a state of emergency and a curfew. "This issue is the subject of discussions and I won't speak about anything until it becomes a reality," he said.

The Lebanese army had deployed in force in Beirut but refrained from using force to open roads to stop the clashes.

Hundreds of Hezbollah and allied followers spent the night manning roadblocks of earth, concrete blocks and old cars on every road leading to the airport and other key spots.

An opposition source said they would stay put.

Some slept in the open air while others sat guard, a few smoking water pipes.

Tension between the government and Hezbollah escalated sharply on Tuesday when the cabinet said the group's communication network was "an attack on the sovereignty of the state". Hezbollah said it was part of its security apparatus and played a major role in its war with Israel in 2006.

Hezbollah was also infuriated by government allegations it was spying on the airport and by the cabinet's decision to remove the head of airport security, a figure close to the opposition, from his post.

Hezbollah was the only Lebanese faction allowed to keep its weapons after the civil war to fight Israeli forces occupying the south. Israel withdrew in 2000 and the fate of Hezbollah's weapons is at the heart of the political crisis.

Hezbollah has deemed Siniora's cabinet illegitimate since its Shi'ite ministers resigned in 2006.

The governing coalition has refused to yield to the opposition's demand for effective veto power in cabinet as a condition for returning to government.

The crisis has paralysed much of government and left Lebanon without a president for five months. (editing by Philippa Fletcher)

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