UPDATE 6-Ukraine government survives in parliament, rage boils outside
* Parliament rejects motion for confidence vote
* Protesters, police face off in Kiev
* President Yanukovich leaves on planned China trip
* Cost of insuring Ukrainian debt hits new highs
By Natalia Zinets and Matt Robinson
KIEV, Dec 3 (Reuters) - Ukraine's embattled government held onto power in parliament on Tuesday but President Viktor Yanukovich left on a trip to China with much of the centre of the capital in the hands of furious protesters who say they will not leave until he quits.
Yanukovich's decision to spurn a trade and integration pact with the European Union has split the country between those who see its future with Europe and those who yearn for better ties with its old Soviet masters in Moscow.
Opponents hope to mount a re-run of the 2004-5 "Orange Revolution" that overthrew Ukraine's post-Soviet order and doomed Yanukovich's first attempt to become president.
Confrontation on the streets adds to a risk of financial turmoil. Ukraine faces gas bills and debt repayments next year of more than $17 billion. The cost of insuring its debt against default hit its highest since January 2010.
While helmeted riot police faced off in freezing conditions against thousands of pro-EU protesters at parliament's doors, lawmakers inside rejected an opposition demand for a vote of no-confidence in the government of Prime Minister Mykola Azarov.
But even that victory was limited: the vast majority of pro-government deputies either cast votes abstaining or did not vote at all, a sign of apparent discontent in their ranks. At least two members of Yanukovich's Regions Party faction in parliament have defected.
"I ask Yanukovich - resign!" Vitaly Klitschko, the World Boxing Council heavyweight champion whose physically imposing presence has helped him emerge as a leader of the opposition, said in parliament.
The prime minister apologised for police violence against protesters during demonstrations, but was forced to speak over a barrage of catcalls from opposition lawmakers who shouted at him for speaking in Russian, rather than Ukraine's state language.
Protesters see the government's Nov. 21 rejection of an EU trade deal as a fundamental shift in the future outlook of their country, away from the European mainstream and back into the orbit of Moscow.
Some 350,000 people took to the streets and squares of Kiev on Sunday in the biggest show of popular anger since the Orange Revolution, when mass protests overturned the fraudulent declaration of a Yanukovich victory in a presidential election.
The confrontation has laid bare a chasm in the world view dividing Ukrainians. In the east, subject to the Russian empire for centuries, many are native Russian speakers and see Moscow as a source of stability. In the west, including areas that were part of Austria until World War One, some see Russians as imperialists who oppressed their country during Soviet years.
Since his rejection in the Orange Revolution, Yanukovich returned to win an election by promising to bring Ukraine closer to Europe while managing relations with Russia, a major trading partner. Opponents, and some former supporters, see latest his lurch east as a betrayal.
Protesters speak of fears that Yanukovich might order a military crackdown. Addressing the absent president in parliament, Klitschko said: "Don't do anything stupid - don't drive yourself and the country into a dead end."
In Brussels, U.S. Secretary of State John Kerry spoke directly of the threat of unrest: "We urge the Ukrainian government to listen to the voices of its people who want to live in freedom and in opportunity and prosperity. We urge all sides to conduct themselves peacefully. Violence has no place in a modern European state."
The NATO alliance urged Ukraine to "uphold the freedom of expression and assembly," and called for dialogue.
At Kiev's city hall, now an organisational hub for protesters who have occupied the building since Sunday, people dozed on the second floor while others passed through the revolving doors for handouts of food and warm clothing.
In the vast central Independence Square activists gathered signatures calling for Yanukovich's impeachment. Protesters warmed themselves at barricades of plywood, park benches and the remnants of an artificial Christmas tree. As in 2004, tented camps and supplies of food and warm clothing make clear they are hunkering down for a long campaign to bring down Yanukovich.
Protesters have shut the main government headquarters for two days. Azarov said his cabinet would meet in the building on Wednesday, potentially setting up a showdown.
"The Orange Revolution laid the foundation for this," said self-employed businessman Yegor Kitov, 45. "But this movement is stronger because, while then it was political parties that were organising the people, now we are organising ourselves."
Azarov said he was ready to have a dialogue with protest leaders and the opposition on condition they ended their blockade of government buildings.
Protesters say they will not retreat until Yanukovich has been brought down. On Wednesday they plan also to extend their blockade to the presidential administration itself. As evening fell, around 1,000 protesters marched to Yanukovich's presidential administration, singing the national anthem.
The opposition movement so far lacks a unified leadership. Pro-EU liberals share the stage with far-right nationalists, without a galvanising leader in the mould of jailed former prime minister and orange revolutionary Yulia Tymoshenko.
Tymoshenko, who lost a presidential election to Yanukovich in 2010, has since been jailed over a gas deal with Russia from a previous term as prime minister. The EU considers her a political prisoner and has asked for her to travel to Germany for medical treatment. She announced a hunger strike in prison last week. Her family say they have been kept from visiting her.
In her absence the spotlight has fallen on Klitschko, 42, who along with his younger brother Vladimir has monopolised global boxing's four heavyweight crowns since 2011. He heads a party in parliament called "Punch" and boasts a PhD in sport science that earned him the nickname "Dr Ironfist".
"This is Ukraine - we care about looks, and here's this big strong man like Klitschko," said Olga Khimena, 45, from Kiev. "He wasn't the best speaker when he entered politics. But he's learned. You can tell he's intelligent by nature."
Ukraine's currency, bonds and share prices have come under severe pressure. The central bank has been forced to assure people their savings are safe, while the finance minister said Ukraine was repaying its debts and would continue to do so.
"Ukraine is a reliable borrower and is flawlessly fulfilling, and will fulfil, all of its obligations on time," Yuri Kolobov said in a recorded message broadcast by state television on Tuesday.
Standard and Poor's, which already cut Ukraine's credit rating to B- in early November, warned that further political deterioration could bring another downgrade.
Russia wants to draw Ukraine into a Moscow-led customs union and prevent it moving closer to the EU.
Brussels says the trade deal that Yanukovich abandoned would have brought a windfall of investment from European firms taking advantage of Ukraine's competitively-priced workforce. But Ukraine also has huge Soviet-era industries which rely on cheap gas from Russia, making it vulnerable to Kremlin pressure.
China is a possible third source of funds. It has already provided the former Soviet republic with loans worth $10 billion, perhaps explaining why Yanukovich risked the journey there. He is scheduled to stay until Dec. 6 and sign economic and trade agreements.
"Yanukovich is trying to show that the European Union and Russia are not the only possible partners for Ukraine," said Volodymyr Fesenko of Ukraine's Penta think-tank.
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