MADRID, Oct 12 (Reuters) - Basque nationalists clashed with riot police in the Spanish city of San Sebastian on Friday as they tried to stop a rally by Spain's far right Falange on a politically charged and tense national holiday.

An estimated 1,000 protesters torched and overturned rubbish containers to stop the march by dozens of members of the Falange, who call for a unified Spain and an end to regional independence movements.

Police replied with tear gas and rubber bullets to allow the authorised march by the Falange, the original supporters of former dictator General Francisco Franco, on Spain's armed forces day.

"The nationalists have attacked banks, they tried to burn a bus and they've overturned dozens of bins," said a police spokesman, adding that the Falange would not pass until the rioting ended.

The clashes in San Sebastian followed a military parade in Madrid, where spectators waving Spanish flags booed Socialist Prime Minister Jose Luis Rodriguez Zapatero and shouted Spanish unity slogans.

The day commemorates the arrival of Christopher Columbus in the New World.

With a general election less than six months away, Spain's opposition Popular Party accuses Zapatero of being soft on Basque and Catalan nationalists and failing to defend a unified Spain, the Spanish flag and the royal family.

Zapatero last year negotiated with armed Basque guerrillas ETA to try to end their four decades of violence that has killed over 800 people. He abandoned talks after the separatist group killed two people in a December car bombing of Madrid airport.

Security forces were on high alert in Madrid on Friday over fears of an ETA attack after the guerrillas set off a car bomb in Bilbao on Tuesday, injuring a Socialist politician's bodyguard.

Popular Party leader Mariano Rajoy urged Spaniards to show pride in Spain on Friday and to drape the country's red and yellow flag from balconies or wear it on their lapel. One or two flags could be seen on each Madrid apartment block in the city centre. Opinion polls show Zapatero a few points ahead of Rajoy in the run up to the March 2008 election.

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