(Updates Fox News comment in final paragraph)
NEW YORK, July 23 (Reuters) - Protesters gathered on Wednesday outside Fox News Channel to denounce what they claim is its racist campaign coverage, including a pundit who called Democratic presidential hopeful Barack Obama a terrorist.
The crowd of some 150 people wielded a petition with more than 600,000 signatures objecting to news coverage by Fox, owned by Rupert Murdoch's News Corp NWSa.N, organizers said.
Some demonstrators held signs that crossed out the network's "Fair and Balanced" slogan and replaced it with the words "Fairly Racist!"
Led by activist groups MoveOn.org and ColorOfChange.org, protesters cited incidents on Fox including an on-screen graphic calling Michelle Obama "Obama's baby mama" and a pundit who confused Obama with Osama bin Laden and joked they should both be assassinated.
Another anchor called a televised fist bump between Obama and his wife a "terrorist fist jab," they said, and talk show host Bill O'Reilly discussed calling a "lynching party" to deal with Michelle Obama after criticizing her patriotism.
"Putting racism on national television and calling it news is never funny," said Andre Banks of ColorOfChange.
Joining the protest was hip hop star Nas, who said the Fox coverage inspired a song "Sly Fox" on his new album.
"Fox poisons this country every time they air racist propaganda and try and call it news," he said.
A spokeswoman for Fox said: "Fox News believes in all protesters exercising their right to free speech, including Nas, who has an album to promote."
(Reporting by Nancy Leinfuss, Editing by Ellen Wulfhorst and Eric Beech)