* Riot police moved into square, held back by protesters
* Yanukovich offers talks but opposition demand he quit
* Kerry, EU foreign policy chief denounce police move
* Opposition says police action cuts off path to compromise
(Adds U.S. State Department comment, edits)
By Alissa de Carbonnel and Pavel Polityuk
KIEV, Dec 11 Ukrainian protesters stood their
ground on Wednesday after an overnight sweep by riot police and
their leaders dismissed an offer of talks from a president they
say must quit for favouring ties with Russia over the European
Pressed by Europe and the United States, which condemned the
destruction of a protest camp in central Kiev, President Viktor
Yanukovich offered to meet opposition leaders to find a way out
of a crisis that blew up last month when he yielded to pressure
from Moscow and spurned a free trade deal with the EU.
But his opponents, whose supporters continued to occupy the
capital's City Hall, rejected his invitation and stuck to
demands that the president and his government resign.
The authorities had made their most forceful attempt so far
to reclaim the streets, sending in battalions of riot police
with bulldozers to clear Independence Square. There were
scuffles and arrests but police did not enter the nearby City
Hall and by morning they withdrew from the streets.
Within hours, after meetings with U.S. and European Union
officials who had urged him to compromise, Yanukovich asked his
opponents to meet him to negotiate a way out of the impasse:
"I invite representatives of all political parties, priests,
representatives of civil society to national talks," he said in
a statement that also called on the opposition not to "go down
the road of confrontation and ultimatums".
One protest leader, Oleh Tyahnibok, dismissed the move as "a
farce and a comedy", while Arseny Yatsenyuk, a leader of a major
opposition party, said there should only be talks once their
demands had been met. These include the resignation of the
president and government and a release of prisoners.
In some of the strongest comments from Washington so far,
the White House spokesman urged Yanukovich to listen to the
people and resume Ukraine's integration with Europe: "Violence
of this sort that we have seen on the streets of Kiev is
impermissible in a democratic state," he added.
Secretary of State John Kerry spoke of "disgust" at the use
of force and a spokeswoman for his department said Washington
was considering sanctions against Ukraine, among other options -
a move that could further sour relations with Russia, which says
the West is trying to browbeat Kiev to weaken Moscow.
At stake is the future of a country of 46 million people,
torn between popular hopes of joining the European mainstream
and the demands of former Soviet master Russia, which controls
the flow of cheap natural gas needed to stave off bankruptcy.
At the main protest camp on Independence Square, pop stars,
politicians and priests had pleaded with police not to shed
blood. The interior minister called for calm and promised that
the square would not be stormed. But even after the police left
the streets, Vitaly Klitschko, a world boxing champion who has
emerged as one of the main figures of the opposition, said the
overnight action had "closed off the path to compromise".
"We understand that Yanukovich has not wish to talk to the
people and only understands physical force," he said.
The interior ministry appealed for restraint, however, and
the police action stalled after day broke, with temperatures in
the snowbound city stuck well below freezing. Some riot police
left to cheers from lines of protesters.
At City Hall, demonstrators had sprayed police with water
from a hose and had lobbed a Molotov cocktail from a window into
a police truck before the officers finally withdrew.
On the square, protesters, many wearing hardhats in orange,
the colour that symbolised a successful popular revolt against a
fraudulent election in 2004, had listened to prayers and a plea
from national pop icon Ruslana: "Do not hurt us!"
Some protesters held mobile phones in the air like candles
and sang the national anthem, while church bells rang out from a
cathedral a mile away, as in times of danger centuries ago.
"He is spitting in the faces of the United States, 28
countries of Europe, 46 million Ukrainians," opposition leader
Yatsenyuk said of Yanukovich during the night. "We will not
forgive him this."
The eventual police withdrawal was greeted with euphoria.
"We are seeing that truth does exist, that it is worth
fighting for. It is a small victory, but these small victories
will lead to big victories," said protester Serhiy Chorny.
The crisis has added to the financial hardship of a country
on the brink of bankruptcy. The cost of insuring Ukraine's debt
against default initially rose 30 basis points, before falling
back after the police withdrew from the streets.
It now costs over $1 million a year to insure $10 million in
state debt over five years - showing investors think it is more
likely than not Ukraine will default in that time.
European leaders say the trade pact with Ukraine would have
brought investment. But the country's Soviet-era industry relies
on Russian natural gas, giving Moscow enormous leverage.
Prime Minister Mykola Azarov said on Wednesday he had told
European leaders they would need to provide Kiev with 20 billion
euros in aid for Ukraine to sign the stalled pact with Brussels.
He promised that a meeting with Russian officials set for Dec.
17 would not include talks on joining a Moscow-dominated customs
union, a major worry for the opposition.
EU foreign policy chief Catherine Ashton and U.S. Assistant
Secretary of State Victoria Nuland were both in Kiev, as part of
a diplomatic campaign to lure Ukraine back westwards.
Nuland visited protesters before meeting Yanukovich on
Wednesday. After two hours of talks with the president, she said
she had complained to him about police behaviour.
"But we also made clear that we believe there is a way out
for Ukraine, that it is still possible to save Ukraine's
European future and that is what we want to see the president
lead," she said. This would require reopening talks with Europe
and with the International Monetary Fund, which has offered
Ukraine loans on conditions which Yanukovich has rejected.
European Union officials are discussing with the IMF, World
Bank and other financial institutions how to help Ukraine if it
decides after all to sign an EU deal.
After meeting Yanukovich, Ashton, too, condemned the use of
force against demonstrators as "totally unacceptable". She said
those arrested must be released and all-party talks begun.
The police action re-energised a protest movement that
activists had feared could lose momentum in the bitter cold.
Thousands of people streamed to the square in the dead of
night, woken by telephone calls and social media messages from
those standing their ground. After the police left, volunteers
rebuilt barricades and poured water on the cobblestones to turn
them into ice sheets in anticipation of another assault.
They packed ice-hard snow over metal scraps, logs and
benches while a priest on stage called out: "They broke down our
barricades, but they can't break our hearts!"
"This will freeze and be strong," said Mykhaylo Yichka, 24,
a choir director, who planned to volunteer at the camp until
evening before going home to catch up on sleep.
"I want a normal life, but this government cannot give it to
me and only makes laws to serve itself. So I am here."
(Additional reporting by Natalia Zinets, Richard Balmforth and
Elizabeth Piper in Kiev; Writing by Peter Graff; Editing by
Janet McBride and Alastair Macdonald)