By Kamal Naama

FALLUJA, Iraq (Reuters) - Iraqi troops shot dead at least four people during clashes with Sunni Muslim protesters in Falluja on Friday in escalating unrest against Shi'ite Prime Minister Nuri al-Maliki.

A Reuters witness said troops initially fired in the air to disperse crowds, but then he saw some soldiers fire towards protesters who had approached their military vehicles and set one of them on fire.

Thousands of Sunnis have taken to the streets to protest against mistreatment of their minority sect since late December, increasing worries that Iraq could slide back into widespread sectarian confrontation.

Friday's violence complicates Maliki's attempts to end the protests, where demands range from amendment of terrorism laws that many Sunnis feel single them out to more radical calls for the Shi'ite leader to step down.

After thousands gathered for Friday prayers in Falluja, a mostly Sunni city 50 km (30 miles) north of the capital, clashes broke out when troops arrested three protesters and others tried to block a major highway, officials said.

"A final count shows we have six people killed and 52 wounded," a hospital source told Reuters. He said at least four had died from gunshot wounds, but it was not clear how the other two people had died.

A local television channel showed demonstrators approaching the army vehicles and throwing stones and water bottles while troops tried to keep them away by firing in the air. But images also showed one soldier aiming his rifle at demonstrators.

"I was trying to see the burned vehicle when the army started to drive the demonstrators away. When that did not work the soldiers opened fire at the people," said Aziz Nazal, a cameraman, who was wounded in his hand.

A year after the last American troops left Iraq, sectarian tensions are still raw in Iraq, where many lived through Shi'ite-against-Sunni bloodletting that killed tens of thousands a few years after the 2003 U.S.-led invasion.

Since the fall of the Sunni dictator Saddam Hussein a decade ago, many Iraqi Sunnis feel they have been sidelined by the Shi'ite leadership and believe Maliki is amassing power at their community's expense.

SUNNI FRUSTRATIONS

The protests erupted in late December when authorities arrested the bodyguards of the Sunni finance minister on terrorism charges, a move that many Sunnis saw as politically motivated. Officials say it is simply a judicial case.

Unrest has centered on the Sunni heartland of Anbar, a vast desert province that makes up a third of Iraq's territory and is populated mainly by Sunnis in towns along the Euphrates River.

Falluja, once the heart of al Qaeda's battle against American troops, suffered some of the worst urban fighting in the U.S.-led war and many there still harbor bitter memories.

Among the thousands of protesters in Falluja on Friday, some raised the old three-star Iraqi flag from the Saddam era and the black flag of al Qaeda's local wing, Islamic State of Iraq.

Sunni unrest has been accompanied by an uptick in violence from Sunni Islamist insurgents. Four suicide bombers have struck over the last week, including one in Falluja who targeted a Sunni lawmaker well known for his bitter opposition to al Qaeda.

The protests are evolving into a major political challenge for Maliki, whose fragile government, comprising Shi'ites, Sunnis and ethnic Kurds, has been deadlocked over how to share power almost since it was formed two years ago.

Authorities have released nearly 1,000 detainees in an effort to defuse the protests.

Moderate Sunni leaders are calling for modification of the anti-terrorism law, more control over a campaign against former members of Saddam's outlawed Baath party and the release of more detained prisoners under an amnesty law.

But more radical Islamist leaders and clerics call for Maliki's resignation and even for an autonomous Sunni Muslim region to be set up in Anbar.

The tensions are adding to Iraqi government worries that the war in neighboring Syria will upset Iraq's own delicate sectarian and ethnic balance.

Mainly Sunni rebels are fighting Syrian President Bashar al-Assad, whose ruling clan belongs to a minority offshoot of Shi'ite Islam. Hardline Iraqi Sunnis think the potential rise of a Sunni regime in Damascus after Assad will strengthen their own position in Baghdad.

(Reporting by Kamal Naama in Falluja and Suadad al-Salhy in Baghdad; Writing by Patrick Markey; Editing by Kevin Liffey)