UPDATE 1-Indonesian police use water cannon in fuel protest

(Adds protesters burn govt vehicle)

JAKARTA, June 24 (Reuters) - Indonesian police used water cannons to disperse about 500 protesters who threw rocks and bamboo sticks at police and broke a parliament building fence on Tuesday to protest against a hike in fuel prices.

Authorities blocked a key highway as the slogan-shouting activists burnt tyres outside the sprawling parliament grounds to protest against the government decision to hike fuel prices by almost 30 percent last month.

Angry protesters also burnt a government vehicle outside a university campus, but there were no reports of any injuries. The protesters also urged the government to investigate the recent death of a student beaten by police during an anti-fuel hike protest last month.

While Indonesia still has some of the lowest fuel prices in Asia, the fuel subsidies issue is politically sensitive and the latest price hike has sparked protests in a country where millions already suffered from rising energy and food costs.

Some protesters spray-painted "Bring down SBY-JK" on a wall in red. Others carried banners saying "SBY-JK, where's your promise that you won't raise fuel prices?".

SBY and JK refer to the initials of President Susilo Bambang Yudhoyono and Vice President Jusuf Kalla.

Police detained at least three protesters from the Tuesday rally, Reuters witnesses said.

The government says it has no choice but to progressively trim fuel subsidies that cost billions of dollars a year and have become impossible to fund as global oil prices soar. (Reporting by Telly Nathalia; Writing by Olivia Rondonuwu, Editing by Sugita Katyal and Sanjeev Miglani)