By Cynthia Johnston

16 February 2011

MANAMA (Reuters) – Thousands of Shi'ite demonstrators, inspired by popular revolts that toppled rulers in Tunisia and Egypt, poured into Bahrain's capital on Wednesday to mourn for a second protestor killed in clashes this week.
Several hundred gathered at a funeral procession for a man shot dead when police and mourners clashed at an earlier funeral procession on Tuesday.

"The people demand the fall of the regime!" protesters chanted, with the men pounding their chests, a Shi'ite symbol of sacrifice and anguish.
For the moment, protestors are calling for the resignation of Prime Minister Sheikh Khalifa bin Salman al-Khalifa rather than King Hamad bin Isa al-Khalifa, who has the final say in politics.

Sheikh Khalifa, the king's uncle, has governed the Gulf Arab state since its independence in 1971 and is seen as being mostly concerned with keeping the ruling family's grip on politics and the economy.
Bahrain's main stock index was flat on Wednesday, trading slightly higher near four month-highs. Stability concerns have raised the cost of insuring Bahrain's debt to their highest levels since August 2009.

"We are requesting our rights in a peaceful way," said Bakr Akil, a 20 year-old university student, wearing a sheet stained with red ink that he said was a symbol of his willingness to sacrifice his life for freedom.
"I am optimistic that our big presence will achieve our demands," Akil said.
Women dressed in black abaya cloaks followed the procession with their own chants calling for peace and Bahraini unity.

Elsewhere in central Manama, witnesses said about 2,000 protestors had spent the night in tents at Bahrain's Pearl Roundabout, similar to the number marching on the streets a day earlier.
It remains to be seen whether the number would rise or fall during Wednesday. Some will have to return to work, after a public holiday on Tuesday to mark the Prophet Mohammed's birthday.

Police kept their distance, mostly confining themselves to a nearby dirt lot with dozens of SUV police vehicles. The ministry of Interior announced that all roads were open.
The demonstrators from Bahrain's Shi'ite majority say the ruling Sunni minority shuts them out of housing, healthcare and government jobs.

The main Shi'ite opposition bloc Wefaq, which boycotted parliament to protest the clampdown by Sunni security forces, said it would hold talks with the government on Wednesday.
"We support the people here, we are not the decision makers," said Ibrahim Mattar, a Wefaq parliamentarian who had joined the funeral procession.
"The people are the decision makers," Mattar said, adding that Wefaq would call for direct election of the prime minister.

DEMOGRAPHIC BALANCE

Activists say they also want the release of political prisoners, which the government has promised, and the creation of a new constitution.
Poverty, high unemployment and alleged attempts by the state to grant citizenship to Sunni foreigners to change the demographic balance have intensified discontent among Bahrain's Shi'ites.

About half of the tiny island kingdom's 1.3 million people are Bahraini, the rest being foreign workers.
Analysts say large-scale unrest in Bahrain, home to the U.S. Navy's Fifth Fleet and a regional offshore banking center, could embolden marginalized Shi'ites in nearby Saudi Arabia, the world's biggest oil exporter.

"The United States is very concerned by recent violence surrounding protests in Bahrain," State Department spokesman P.J. Crowley said in a statement. "We also call on all parties to exercise restraint and refrain from violence."

King Hamad expressed his condolences for "the deaths of two of our dear sons" in a televised speech and said a committee would investigate the killings.
Bahrain, in a move appeared aimed at preventing Shi'ite discontent from boiling over, had offered cash payouts of around 1,000 dinars ($2,650) per family in the run-up to this week's protests.

(For an interactive factbox on protests in the Middle East and Africa, please click on http://link.reuters.com/puk87r) (Reporting by Frederik Richter; Writing by Reed Stevenson; editing by Matthew Jones)