CONAKRY (Reuters) - President Alpha Conde appealed for calm on Tuesday after at least 11 people were killed in two days of ethnic violence in the southeastern Guinea, underscoring tensions ahead of parliamentary elections.

In Guinea's second largest city of Nzerekore, which lies some 980 km (612 miles) from the coastal capital Conakry, ethnic gangs prowled the streets for a second day on Tuesday and witnesses reported shooting.

A local police source, who asked not to be identified, said at least 11 people were killed in the violence. A witness at the hospital said many of the dead were killed with machetes and one appeared to have been burned alive.

"The town of Nzerekore has witnessed events resulting in a loss of human life, several wounded and important damage to property. Faced with this situation, I call on the population for calm," Conde said in an address on national television.

The president, elected in 2010 in Guinea's first democratic transition of power, appealed for national unity in the run-up to long-delayed legislative elections.

After months of deadlock and deadly clashes, often ethnically driven, Conde and the opposition agreed this month to hold the vote on September 24.

The latest violence erupted on Monday after a man accused of being a thief was killed in the town of Koule, some 30 km (19 miles) from Nzerekore, residents said.

"Everything is closed: the market, banks, shops. People have stayed at home," said resident Ousmane Balde.

The poll is meant to be the final step in the return to civilian rule in the mineral-rich nation after a 2008 coup. Conde rivals, however, accuse him of trying to rig the planned legislative vote.

Conde draws support from Guinea's second-largest ethnic group, the Malinke, while the opposition is backed by the Peul, who account for around 40 percent of the population.

Mining firms have signed multi-billion dollar deals in a bid to secure untapped mineral riches, especially iron ore, but political instability has led to some investments being frozen.

The region hit by the clashes is near Guinea's porous border with Liberia, Ivory Coast and Sierra Leone, all nations that are in the process of recovering from conflicts of their own.

(Reporting by Saliou Samb; Writing by Daniel Flynn, Editing by Gareth Jones and Sandra Maler)