By Charles Matsebula

MBABANE, Sept 4 (Reuters) - Demonstrators stoned shops, looted a market and set off an explosion, damaging a bus, as a second day of protests for democratic reform in Swaziland turned violent on Thursday.

Some 5,000 people marched in Mbabane, capital of the southern African monarchy, calling for multi-party democracy and criticising the lavish lifestyle of King Mswati III.

Police spokesman Vusi Masuku said police had used water cannon and teargas to disperse protesters who had started to damage property.

A police bomb squad was sent in after a small blast damaged a bus. But there were no reports of any injuries during the protest, which forced banks, embassies and government offices to close for the day, while some shops only opened late in the afternoon.

Leaders of the march -- which followed a smaller rally in the main commercial city Manzini on Wednesday -- vowed more protests and a labour stoppage in the run-up to a Sept. 19 parliamentary election.

"We will continue on Saturday and from there we are calling for the biggest ever strike action from September 15 to 19, the day of the elections," Jan Sithole, secretary general of the Swaziland Federation of Trade Unions, said to a jubilant response from the protesters.

The People's United Democratic Movement (PUDEMO), which is fiercely critical of the government, said last month it would step up pressure on Mswati, saying he showed a "high appetite for leisure" while the economy declines.

"It has come to our attention that the current Tinkhundla (Swaziland governance) system has dismally failed to take care of the Swazi people so it is now time that we call for an immediate democratic change," Sithole told the demonstrators.

The protesters have criticised a costly 40th birthday celebration for Mswati this weekend, coinciding with the 40th anniversary of independence from Britain.

The Swazi monarch has courted controversy for his lavish lifestyle while two-thirds of his subjects live in poverty, in a nation where about 40 percent of adults live with HIV.

Last month, Forbes magazine listed him as the 15th-richest monarch in the world. He was the only African on the list. (Editing by Muchena Zigomo and Mark Trevelyan)

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