By Jessie Pang and Sharon Tam
HONG KONG (Reuters) - Thousands of black-clad protesters took to the streets near the heart of Hong Kong's financial district on Tuesday, defying a government ban on a rally and setting up the likelihood of clashes with police who locked down the city centre.
The Chinese territory has been on edge for weeks in anticipation of violent protests on Tuesday's 70th anniversary of the founding of the People's Republic of China.
Nearly four months of street clashes and demonstrations peaked on Sunday night with some of the most intense skirmishes with police, posing the gravest popular challenge to Chinese President Xi Jinping since he came to power.
Protesters have vowed to seize on Tuesday to propel their calls for greater democracy onto the international stage, hijacking an occasion Beijing sees as an opportunity to showcase China's economic and military progress.
Authorities denied permission for a march, but protesters fanned out across Hong Kong regardless, rallying in parts of the main island near the financial centre, across the harbour in Kowloon and the New Territories, piling pressure on already stretched police resources.
Thousands marched from Causeway Bay toward government headquarters in Admiralty, while tensions flared in the residential district of Wong Tai Sin where police fired volleys of tear gas to disperse protesters outside a famous Taoist temple.
"I’d rather die than have no freedom,” said a college student who identified himself as just Green, speaking outside the Che Kung Temple in the New Territories, where protesters also rallied.
Police said on Monday they expected a "very serious violent attack" in the city but gave no details.
Police said they arrested five people, aged between 17 and 25, in the central district of Wan Chai on Monday night after finding them with walkie-talkies, lighters and material for petrol bombs, including 18 litres (4.75 gallons) of fuel and empty bottles.
Hundreds of officials and members of the pro-establishment elite began the day with a flag-raising ceremony and National Day reception at the Convention and Exhibition Centre, held early and moved behind closed doors. Roads to the centre were closed and tightly policed.
Hong Kong has benefited from China's support under the "one country, two systems" policy, Acting Chief Executive Matthew Cheung told the assembly, referring to guarantees of political freedoms after the city's handover from British to Chinese rule in 1997.
However, he said escalating violence was disrupting social order and hurting the economy.
NUMBERS DOWN
The IFC mall, one of the city's largest upscale shopping centres, was closed on Tuesday, depriving retailers of sales in what would normally be a busy shopping week when mainland tour groups traditionally flood in for the annual Golden Week holiday.
IFC houses an Apple Inc <AAPL.O> store, jewellers Tiffany & Co <TIF.N> and Chow Sang Sang <0016.HK>, cosmetics maker L'Occitane <0973.HK> and Gucci, which is owned by French group Kering <PRTP.PA>.
Standard & Poor's cut its Hong Kong economic growth forecast on Tuesday to a paltry 0.2 percent for this year and 1.6 percent for 2020, blaming tension in the city for the plunging retail sales and a sharp dip in tourism. Its last forecast in July was for 2.2 percent growth this year and 2.4 percent for 2020.
ADVERTISEMENTVisitor arrivals dropped 39% in August from a year earlier, with the number of mainland tourists to Hong Kong dropping 42.3% over the period, according to the latest data.
Cheung called a first "open dialogue" last week with citizens an important step and said more would follow.
A group of protesters outside the venue shouted "No national day celebrations, only national day mourning", and called for those arrested during recent clashes to be released. Police fired pepper spray during a scuffle outside a nearby train station.
Rail operator MTR Corp closed some flash-point metro stations.
The government of embattled leader Carrie Lam has already cancelled an annual Oct. 1 fireworks display over the city's Victoria Harbour, citing public safety.
ADVERTISEMENTLam, who was trapped in a stadium for hours last week after attending the "open dialogue", left for Beijing on Monday to celebrate China's birthday on the mainland. She will return on Tuesday.
BEIJING PARADES
In contrast to events in Hong Kong, Beijing's carefully choreographed anniversary festivities included troops marching through part of Tiananmen Square with new missiles and floats celebrating the country's technological prowess.
Lam was shown on television smiling as a float celebrating Hong Kong went past as she sat with Chinese officials.
ADVERTISEMENTThe Communist Party leadership is determined to project an image of national strength and unity in the face of challenges including Hong Kong's unrest, slowing economic growth and a trade war with the United States.
"On our journey forward, we must uphold the principles of peaceful reunification and one country, two systems; maintain lasting prosperity and stability in Hong Kong and Macau ... and continue to strive for the motherland's complete reunification," Xi said in his nationally televised speech in Beijing.
Hong Kong protesters are angry about what they see as creeping Chinese interference in the Asian financial centre.
China dismisses the accusation and has accused foreign governments, including the United States and Britain, of fanning anti-China sentiment.
Last month, Beijing moved thousands of troops across the border into the city. The Xinhua state news agency described the movement as routine rotation.
ADVERTISEMENTAsian and Western envoys in Hong Kong, however, have said the absence of any evidence that troops had been withdrawn suggested it was a reinforcement, with the largest-ever regular army force now stationed in the city.
(Reporting by Jessie Pang and Sharon Tam; Additional reporting by Anne Marie Roantree, Farah Master, James Pomfret, Donny Kwok, Twinnie Siu and Jennifer Hughes; Writing by Clara Ferreira Marques and Bill Rigby; Editing by Lincoln Feast and Robert Birsel)