* Restoring village names long a Kurdish demand
* Government might allow sermons in Kurdish
* Erdogan seeking broad consensus
By Ibon Villelabeitia
ANKARA, Aug 20 Turkey has begun restoring names of Kurdish villages and is considering allowing religious sermons to be made in Kurdish as part of reforms to answer the grievances of the ethnic minority and advance its EU candidacy.
Prime Minister Tayyip Erdogan has said his government will push democratic reforms to address decades-old grievances from the Kurdish population and help end a 25-year conflict between the state and separatist guerrillas.
Erdogan, who has given few details on the measures and their timeframe, is seeking public, military and parliamentary support for his "Kurdish initiative", aimed at persuading Kurdistan Workers' Party (PKK) rebels to lay down arms and end an insurgency that has killed some 40,000 people.
The conflict has long hampered Ankara's European Union membership bid and weighed on the local economy.
Analysts say some of the expected measures will require difficult legal and constitution reforms for which Erdogan needs broad consensus, but the main opposition parties have rejected a call for talks, arguing the process threatened Turkey's unity.
Turkey's estimated 12 million Kurds out of a population of 72 million have long complained of discrimination by the state.
Erdogan's Islamist-rooted AK Party, which first came to power in 2002, has taken some steps to expand political and cultural rights for Kurds, partly under pressure from the EU.
Haberturk daily said the provincial council of Diyarbakir in the mainly Kurdish southeast had restored the old Kurdish name to a hamlet and the state-appointed provincial governor had not objected. The governor had challenged similar moves by the council in court in the past.
Villagers had applied to the council for it to accept the name Celkaniya for their settlement in place of the Turkish name Kirkpinar. The council is dominated by the pro-Kurdish Democratic Society Party (DTP).
"This is a very positive development. We are still in shock. The government's democratic initiative project is bearing fruit for the first time in Diyarbakir," the paper quoted council chairman Sehmus Bayhan, from the DTP, as saying.
More than 12,000 village names, some 35 percent of the total, were changed in Turkey between 1940-2000 under a "Turkification" drive, according to a report by Milliyet daily.
The name change initiative, dating back to the Ottoman era before World War One, was also designed to give Turkish names to places with Armenian, Greek and Bulgarian names, it said.
Hurriyet newspaper reported Interior Minister Besir Atalay, who has been holding talks with political parties, business groups and Turkey's generals on the "Kurdish initiative", as saying he would discuss with the country's religious authorities the possibility of sermons being made in Kurdish.
Under the plan, sermons in the main cities in the southeast will remain in Turkish but in villages where the population is completely Kurdish, preachers will be allowed to choose whether they conduct sermons in Turkish or Kurdish.
Erdogan was due to chair a national security meeting later on Thursday to discuss the Kurdish reforms with ministers and the country's top commander, General Ilker Basbug.
The jailed guerrilla leader of the PKK, Abdullah Ocalan, had been expected last weekend to issue a "road-map" of his own on how to resolve the conflict, but this has been delayed. (Additional reporting by Daren Butler in Istanbul) (Editing by Elizabeth Fullerton)