Icelanders call for PM to resign over crisis

REYKJAVIK (Reuters) - Icelanders demonstrated in the capital Saturday to call for resignation of the prime minister and the central bank chief for failing to avert the financial crisis that has crippled the economy.

Demonstrators, numbering about 2,000 according to organisers, also demanded that the North Atlantic island take steps to join the European Union soon.

People gathered in front of parliament and marched to a government building in the centre of Reykjavik where they chanted calls for Prime Minister Geir Haarde and central bank head David Oddsson to resign.

Protesters called for early elections to speed up EU membership.

Iceland's financial system has all but collapsed since the country was forced to take over three of its biggest banks this month.

The coalition government, whose term runs out in 2011, is divided on the issue of EU membership, with Haarde's Independence Party opposing it while its junior partner, the Social Democratic Alliance, is in favour.

Protest organiser Kolfinnur Baldvinsdottir told Reuters: "We need elections ... that's the issue to vote for."

Friday, the government said it had agreed terms for a $2 billion aid package with the International Monetary Fund (IMF).

The deal still needs to be approved by the IMF board and Haarde said Friday he expected it would take about 10 days for the review to take place.

(Reporting by Sakari Suoninen; editing by Andrew Dobbie)