(Updates with Canberra evacuating some embassy staff, families)

By Nelyo Sarmento

DILI, March 5 (Reuters) - Thousands of angry supporters of East Timor rebel leader Alfredo Reinado burnt tyres and threw stones in the capital on Monday to protest against a raid by international troops on the fugitive's hideout.

Reinado, who led a revolt that plunged the fledgling nation into chaos last year, escaped Saturday's raid on his Same base by Australian-led international peacekeeping forces in which four people were killed.

Supporters gathered in the heart of Dili, shouting "Long Live Alfredo", and denounced President Xanana Gusmao, who had ordered security forces to arrest Reinado following accusations the former army major led a raid on a police post last month and made off with 25 automatic weapons and ammunition.

Armed peacekeepers patrolled the streets to disperse the crowds, with Reinado's supporters replying with threats to continue protesting until Gusmao withdrew his arrest order.

"You better go back to your country instead of making people suffer," said one of Reinado's angry supporters, pointing to Australian peacekeeping troops.

The Australian government later announced it would evacuate non-emergency staff and families from its Dili embassy.

"The security situation is volatile and there is a high risk of violent civil unrest," Foreign Minister Alexander Downer said in a statement. "There is an increasing likelihood that Australians could be specifically targeted."

Streets emptied on Monday as international police moved to secure the capital and protesters blocked roads with wrecked cars, preventing government officials from going to work, a Reuters witness said.

DIVISIONS

The protest broke up in the afternoon and Gusmao called on the people of East Timor not to do anything that could destroy the nation's unity.

"We have seen many demonstrations lately that are not conveying positive messages in solving the myriad problems this country faces and on the contrary have contributed in provoking divisions among the society when this country needs unity," he said in a speech broadcast on television and radio.

He added that the presence of international forces in East Timor was necessary ahead of next month's presidential election.

Troops are still searching for Reinado, who has been on the run since he escaped from jail in Dili in August along with 50 other inmates.

After Saturday's raid, Gusmao urged Reinado to surrender, saying the government would treat him with respect. But Reinado has said he will not surrender to international troops.

Australia, which has 800 troops in East Timor, said Reinado was a threat to East Timor's security and should surrender.

"It is preferable that that threat be neutralised. But the objective obviously is to take him into custody," Prime Minister John Howard told Australian television.

Reinado has made several public appearances since the escape, including a meeting with the country's military chief. Security forces made no attempt to arrest him.

The standoff between Reinado and the troops has raised fears of violence ahead of the April election.

East Timor voted in a 1999 referendum for independence from Indonesia, which had annexed it after Portugal ended its colonial rule in 1975. The country became fully independent in 2002 after a period of U.N. administration.

But an east-west divide in the nation erupted into chaos and gang violence last May following the sacking of 600 soldiers. (Additional reporting by Rob Taylor in Canberra)

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