MANAMA (Reuters) - Bahraini forces used tanks and helicopters to drive protesters from the streets on Wednesday clearing a camp that had become a symbol of the Shi'ite Muslim uprising and drawing rare criticism from their U.S. allies.
Three police and three protesters were killed in the violence that has transformed a crisis between the island's majority Shi'ites and minority Sunnis into a regional standoff between Sunni Gulf Arab states and non-Arab Shi'ite power Iran.
U.S. President Barack Obama called the kings of Saudi Arabia, a strategic ally of Washington in the Middle East, and of Bahrain, home to the U.S. Navy's Fifth Fleet, to urge restraint. Secretary of State Hillary Clinton said Bahrain and Gulf allies who sent in troops to back the Sunni royals were on the wrong track.
"We find what's happening in Bahrain alarming. We think that there is no security answer to the aspirations and demands of the demonstrators," she told CBS. "They are on the wrong track."
The assault began less than 24 hours after Bahrain declared martial law to quell sectarian unrest that has sucked in troops from fellow Sunni-ruled neighbours Saudi Arabia, Qatar, Kuwait and the United Arab Emirates .
A member of parliament from the largest Shi'ite opposition group denounced the assault as a war on the Shi'ite community.
"This is war of annihilation. This does not happen even in wars and this is not acceptable," Abdel Jalil Khalil, the head of Wefaq's 18-member parliament bloc, said. "I saw them fire live rounds, in front of my own eyes."
A protest called by the youth movement, which played a leading role in the protest camp at Pearl roundabout, failed to materialise after the military banned all gatherings and imposed a curfew from 4 p.m. to 4 a.m. across a large swathe of Manama.
A Reuters witness saw Bahraini tanks move in the direction of Budaya Street, where the protest was set to take place.
U.S. Assistant Secretary of State Jeff Feltman has been in Bahrain since Monday to push for talks to resolve the crisis.
Over 60 percent of Bahrainis are Shi'ites and they complain of discrimination at the hands of the Sunni royal family, the al-Khalifa. Most Shi'ites want a constitutional monarchy but calls by some hardliners for the overthrow of the monarchy have alarmed the Sunni minority, which fears the unrest serves Iran.
Gulf Arab ruling families are Sunni and analysts say the intervention of their forces in Bahrain might provoke a response from Iran, which supports Shi'ite groups in Iraq and Lebanon.
Iranian President Mahmoud Ahmadinejad said Bahrain's crackdown was "unjustifiable and irreparable."
"Today, we witness the degree of pressure imposed on the majority of people in Bahrain," he said according to state TV.
"What has happened is bad, unjustifiable and irreparable."
Helicopters flew overhead and riot police fired teargas as they advanced from about 7 a.m. on the Pearl roundabout, focal point of weeks of protests. Youths hurled petrol bombs at police near the roundabout and scattered as new rounds of teargas hit.
The area was cleared within about two hours but protesters knocked down two police in their cars as they fled.
Riot police blocked access to Salmaniya hospital, where many civilian casualties had previously been treated, and cleared several tents set up by opposition activists in the car park.
Witnesses said access to other health centres was also blocked and small health centres and public were inundated with wounded civilians from around Manama.
"I've seen some terrible wounds, lots of people hurt by bird shot. One had half his head injured with that. One had his hand blown up by some kind of bullet. He was using his other hand to show the victory sign," said one visitor to Budaya health centre, who declined to give his name.
"There's less than 50 injured there but it's very small there's not enough chairs even for everyone. I went to donate blood but they couldn't test it because of lack of equipment."
A medical source said dozens were taken to Bahrain International Hospital, hit by rubber bullets or shot gun pellets or suffering tear gas inhalation, all weapons used by riot police. One was hit by a live bullet.
Wearing semi-automatic rifles and black face masks, Bahraini troops blocked off several streets including the main road to the Shi'ite area of Sitra. Tanks guarded key intersections and the entrances to some areas. Streets were deserted, shops were closed and people queued at cash machines.
"There are shots near and far. It's not only shooting in the air, it's urban warfare," said a resident near Budaya Street.
The Shi'ite health minister quit over the assault and the Shi'ite housing minister is boycotting cabinet, according to opposition newspaper Al Wasat, which has also come under attack.
The crackdown by Bahrain's Sunni-led government against Shi'ite protesters has galvanised Iraq's own Shi'ite community, exacerbating sectarian tension that led to years of war in Iraq.
Iraq's Shi'ite prime minister criticised the assault and Shi'ite cleric Moqtada al-Sadr called for protests. In Lebanon, supporters of Shi'ite group Hezbollah also came out in solidarity with their fellow Shia.
"This was a major and a dangerous decision because this issue has been internationalised now. There are protests in Iraq, in Iran, in Lebanon," said Wefaq MP Jasim Hussein.
"There was no reason when our demands were local demands and nothing to do with Saudi Arabia or the United Arab Emirates."
Bahrain has been gripped by its worst unrest since the 1990s since protesters took to the streets last month, inspired by uprisings that toppled the leaders of Egypt and Tunisia.
Unlike those countries, where the mainly Sunni populations united against the regime, Bahrain is split along sectarian lines, raising the risk of a slide into civil conflict.
The United Nations and Britain have echoed the U.S. call for restraint and the Group of Eight powers expressed concern.
The British embassy upgraded the travel warning on its website on Wednesday as the security situation deteriorated and residents trying to flee said flights out of Bahrain were full.
Bahrain's stock market was closed due to the state of emergency, a day after Fitch downgraded Bahrain's sovereign ratings by two notches due to the unrest.
Bahraini 5-yr credit default swaps tightened 7 basis points to 350 basis points on Wednesday, according to Markit data.
In London, Standard Chartered and HSBC Holdings -- two of the leading foreign banks in the country -- said they have closed all their branches in Bahrain on Wednesday. Both banks said their priority was the safety of staff.
"When the Gulf states now send military units to the small... island state, there is a very critical risk that the situation will... be seen as part of a broader confrontation," Swedish Foreign Minister Carl Bildt said on his blog.
"While there was most likely initially no Iranian interference, the opportunities for Iran to take advantage of the situation now undeniably grow."
Additional reporting by Frederik Richter in Bahrain, Andrew Hammond in Dubai and Robin Pomeroy in Iran, Caroline Cohn and Steve Slater in London; Editing by Samia Nakhoul and Ralph Boulton