Warning shots in Indonesia's Papua, one dead

(Recasts with one killed in Papua)

JAKARTA, Aug 9 (Reuters) - A man was killed in Indonesia's Papua province after police fired warning shots when a group raised a separatist flag at a ceremony, an official said on Saturday.

Thousands of people had gathered in Wamena city to mark U.N. Indigenous Peoples' Day when the incident happened.

"After the speech, a group of people entered the field and raised an Indonesian flag, a U.N. flag, an SOS flag and the Morning Star flag," said Fadhal Alhamid, leader of the Papua Tribal Council. The Morning Star is a banned separatist flag.

"When the police saw the flag, they immediately fired warning shots and somebody screamed someone has been shot," he added.

The shot man was identified as Opinus Tabuni, 35, an organiser for the event, according to the Institute for Papuan Advocacy and Human Rights, a rights group.

Police could not immediately be reached for comment.

Separately, about 100 Indonesians from a hardline Muslim group rallied outside the U.S. embassy in Jakarta on Saturday to protest against a letter sent by 40 U.S. Congress members calling for the release of two jailed Papuan separatists.

The letter to President Susilo Bambang Yudhoyono urged for the "immediate and unconditional release" of the two men.

Filep Karma and Yusak Pakage were sentenced to 10 and 15 years respectively after raising a separatist flag in December 2004 in the restive province of Papua. The letter also said it believed Papua's human rights situation was deteriorating.

"This is a matter for Indonesia and the letter reflects U.S. intervention against Indonesia's sovereignty," Farid Wadji, a spokesman for Muslim group Hizbut Tahrir Indonesia, told Reuters Television.

The U.S. embassy in Jakarta issued a statement saying Washington "continues to fully support the sovereignty and territorial integrity of Indonesia", while also urging Jakarta to fully implement a special autonomy law in Papua.

Independence activists in Papua have waged a campaign for nearly 40 years to break away from Indonesia, while a low-level armed rebellion has also simmered, often related to disputes over the sharing of rich natural resources.

Last month, six people were arrested on charges of treason after a group hoisted a separatist flag in West Papua. (Reporting by Reuters Television and Karima Anjani; Editing by Ed Davies)