UPDATE 2-Ecuador assembly votes to temporarily close Congress

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By Alexandra Valencia

MONTECRISTI, Ecuador, Nov 29 (Reuters) - Ecuador's constitutional assembly voted on Thursday to shut down the opposition-led Congress until voters decide on a new charter assembly members will draft to advance President Rafael Correa's left-wing proposals.

In a vote broadcast on state television, the assembly controlled by Correa's party agreed to assume Congress' legislative powers until Ecuadoreans vote in a referendum next year to ratify the new constitution that will be debated for at least six months.

The move shores up Correa's position in South America's No. 5 oil producer after he clashed repeatedly with lawmakers blocking some of his reforms after he was elected last year promising sweeping changes in the unstable Andean nation.

"Congress get out," yelled members of Correa's Alianza Pais party that has an 80-seat majority in the assembly.

The decision will likely fuel tensions with lawmakers, who brand the U.S.-trained economist a would-be autocrat and have vowed to keep their posts in the legislature and seek action in international courts.

Correa, who took office in January, is widely popular for taking on elites many Ecuadoreans blame for instability that has toppled three presidents in a decade. A national poll in October gave him a 72 percent approval rating.

But heavy public spending, his promises to restructure debt and a flagging economy have investors on edge.

WALL STREET WORRIED

"Without checks and balances, Correa will push for a legislative agenda based on state intervention," said Patrick Esteruelas, an analyst with political consultancy Eurasia Group. "He has a blank check to implement all the reforms he wants and that is very worrisome."

Correa says he wants to push ahead legislation to strip the central bank's autonomy, eliminate ceilings on current spending and increase state control over the banking sector.

The former economy minister has already shocked Wall Street with his aggressive drive to rework foreign oil contracts and promises to halt payments of "illegitimate" debt or credits acquired by past corrupt governments.

Congress, seen by many in Ecuador as inefficient and corrupt, is on a one-month recess approved by legislators.

Correa's close Andean allies, Venezuelan President Hugo Chavez and Bolivia's Evo Morales, are also seeking sweeping constitutional reforms, which have led to violent protests.

The popular assembly was elected in September with broad powers to rewrite the constitution and overhaul state institutions. Correa says he wants the body to call for an early presidential election next year and curb the powers of traditional elites.

The assembly has six months to draft a new constitution with the option of a 60-day extension.

The assembly ratified Correa in office after he handed in his resignation in a symbolic move to show his independence from members.

In the same vote, assembly members agreed to fire the country's attorney general, bank superintendent and other high-ranking state officials picked by Congress.

The splintered opposition, which has only a few seats in the assembly, says Correa wants to consolidate his presidential powers like Chavez in Venezuela and has promised to try to block any assembly proposals it sees as autocratic. (Reporting by Alexandra Valencia in Montecristi and Alonso Soto in Quito; Editing by Doina Chiacu)