(Corrects paragraph 11 to say these countries have raised fuel prices to reduce the subsidy burden)

* Spanish and Portuguese truckers strike, French protest

* Spanish-French border closed to goods traffic

* Spain to announce measures to counter fuel price surge

By Andrew Hay

MADRID, June 9 (Reuters) - Spanish truck drivers blocked the border with France to all goods traffic on Monday as fuel price protests in Spain, France and Portugal raised fears of food and petrol shortages.

Spanish and Portuguese drivers began indefinite strikes, and lines of trucks up to 8 km (5 miles) long formed on the French side of the border after Spanish picketers smashed the windscreens of foreign goods drivers who tried to enter Spain.

French and Spanish truckers also staged 'go-slow' protests, causing tailbacks of 30 km in Bordeaux, France, and 20 km or more around Madrid and Barcelona.

The drivers were all demanding action to offset the effect of high oil prices, now at record highs of over $139 per barrel.

Spaniards fearing fuel shortages queued to fill their tanks and 40 percent of gas stations ran out of supplies in Spain's hardest hit region, Catalonia, according to one industry group.

Long lines formed at Spanish and Portuguese supermarkets after truckers said they could run out of fresh food in days.

"No one is earning enough money to eat any more: not the truckers, not the fishermen, nobody, and someone has to find a solution," said Jaime Diaz, president of Spain's National Road Transport Confederation.

PRICE DEMANDS

Spanish Prime Minister Jose Luis Rodriguez Zapatero postponed a major speech on the economy to grapple with the first big strike to hit Spain during its worst economic slowdown in 15 years.

But his Socialist government said there would be no electricity or petrol shortages as truckers picketed distribution centres and called for a minimum haulage tariff to counter a 35 percent rise in fuel costs over the past 12 months.

In Portugal, one group of truckers threatened to block the main roads running south to the Algarve tourist region to prevent goods reaching the area.

Fast-growing Asian countries such as India, Malaysia and Indonesia have recently raised fuel prices in a bid to reduce soaring subsidy costs, triggering demonstrations and strikes.

Police used water cannon and batons in Kashmir on Monday to disperse hundreds of government workers protesting over fuel price rises, while a general strike shut down the northeastern state of Assam.

Surging prices have pushed inflation to record highs in Asia and the 15-member euro zone, forcing central banks to threaten to raise interest rates.

HARD HIT SPAIN

Few places in Europe are suffering more than Spain, the euro zone's fourth largest economy, where truckers and fishermen have been hit by soaring fuel costs as recession looms.

Spanish consumer demand is shrivelling as the end of a decade-long housing boom coincides with the global credit crunch and soaring inflation.

Zapatero on Saturday blamed the European Central Bank for a recent jump in oil prices and market interest rates, saying its president, Jean-Claude Trichet, had to show more prudence. Trichet last week said interest rates could rise next month.

Zapatero has offered truckers emergency credit and early retirement incentives but refuses to set minimum tariffs, saying they have to adapt to fierce competition in Spain and Europe.

Small Spanish truck operators are worst hit, while large hauliers have kept working. Strike leaders have dismissed government proposals and want price guarantees to stop large firms undercutting them.

Spain's Development Ministry said it would present measures on Wednesday to take the sting out of fuel price rises, and saw a chance of reaching a deal with the truckers by midweek.

AlertNet news is provided by