Iceland protesters demand government step down

REYKJAVIK, Jan 20 (Reuters) - Icelandic police fired pepper spray and made arrests at a demonstration outside parliament on Tuesday where protesters demanded the government that oversaw the country’s economic collapse step down, local media said.

Several hundred demonstrators, some hammering on pots and pans, gathered around the Althing, amid calls for the Icelandic government to step down, a Reuters witness reported.

Icelandic daily Morgunbladid on its Website said up to 10 people had been arrested and the police had fired pepper spray at the demonstrators.

Iceland succumbed to the global crisis as its currency plunged and its financial system collapsed in October under the weight of billions of dollars of foreign debts incurred by its banks.

The volcanic island’s economy is expected to suffer a huge contraction this year while unemployment, which in recent years has rested close to zero, is set to soar.

Protests against Prime Minister Geir Haarde’s government and the central bank have become a regular fixture in the once-tranquil streets of the capital ever since the collapse of the island’s main commercial banks last year.

A police official estimated more than a thousand protesters had gathered around parliament, but said he had no information about arrests.

Editing by Michael Roddy