(Adds AU statement)

By Opheera McDoom

KHARTOUM, July 13 (Reuters) - Thousands of protesters chanting "Down, Down USA!" rallied in Khartoum on Sunday after reports that the International Criminal Court (ICC) may seek the arrest of Sudan's president for alleged war crimes.

A senior European diplomat said on Friday the court's prosecutor was likely to seek the arrest of President Omar Hassan al-Bashir, in a case he will open on Monday about war crimes the ICC says were committed in Sudan's Darfur region.

"With our souls, with our blood we die for Bashir," the protesters chanted as they marched through the streets of Khartoum towards the offices of the United Nations.

The government-organised protest brought traffic to a standstill. Hundreds of people also gathered near the cabinet office where the government was holding emergency talks.

After the talks the cabinet said it would not recognise any decree from the ICC and that the government would continue to stand by a north-south peace deal, which ended decades of civil war and enshrines elections next year, despite the arrest warrants.

"We are going to continue on in our programme of peace ... and development -- this will not stop us," Information Minister al-Zahawi Ibrahim Malik told reporters.

Sudanese Justice Minister Abdel Basit Sabderat said the ICC was trying to ignite a fire throughout his country.

"(The) ICC is not just targeting the president of the country, but the stability of the Sudanese people because the president represents the nation," he told the crowd outside the cabinet office.

Sudan says an ICC move against its top officials could undermine attempts to end the conflict in Darfur, where international experts say at least 200,000 people have died and 2.5 million have been displaced since rebel groups took up arms against the government in 2003, accusing it of neglect.

Khartoum says 10,000 people have been killed.

The ICC warrant would also pit the demands of the U.N.-backed court against U.N. interests in deploying a peace force in Darfur, where aid officials fear a potential backlash.

WEAPONS SUPPLIER

Most of the protesters were government workers or from unions linked to Bashir's dominant National Congress Party (NCP). The demonstration was organised by the NCP's Sudanese Student Union and other government groups.

Awad Ahmed, 53, an Agriculture Ministry worker, said: "The Sudanese people are all rejecting this -- this is America targeting Sudan. We will not send Bashir. We would die first."

Two senior government officials told Reuters Sudan would probably seek Chinese, Russian and African support at the United Nations to help block a warrant for Bashir.

The U.N. Security Council can pass a resolution suspending an ICC warrant or inquiry. Observers say once Bashir is named, this would do little to improve Sudan's relations with the West.

China is Sudan's largest weapons supplier and dominates Sudan's budding oil industry, which produces more than 500,000 barrels per day.

The African Union said in a statement seen by Reuters on Sunday that "the search for justice should be pursued in a way that does not impede or jeopardise efforts aimed at promoting lasting peace."

Sudan's ambassador to the Arab League, Abdel Moneim Mabrouk, said he was confident the pan-Arab body, which will hold an emergency meeting to discuss the crisis, would support Sudan. An Arab League spokesman said no date had been set for the meeting.

The United Nations has heightened security for its personnel in the capital, evacuating family members, restricting movement and relocating non-essential staff from Darfur.

The British embassy also told nationals to register with them and to store food, fuel and water. (Reporting by Opheera McDoom; writing by Alaa Shahine; Editing by Jon Boyle)

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