By Lin Noueihed and Frederik Richter
MANAMA (Reuters) - Bahrain declared martial law on Tuesday as it struggles to quell an uprising by the island's Shi'ite Muslim majority that has drawn in troops from fellow Sunni-ruled neighbor Saudi Arabia.
The three-month state of emergency will hand wholesale power to Bahrain's security forces, which are dominated by the country's Sunni Muslim elite, stoking sectarian tensions in one of the Gulf's most politically volatile nations.
In a sign of continued disturbances in the tiny kingdom, an opposition politician said a Bahraini man was killed and several wounded in clashes with police in the Shi'ite area of Sitra.
State television said a Bahraini policeman was also killed in clashes, refuting some reports that a Saudi soldier had died.
The United States, a close ally of both Bahrain and Saudi, said it was concerned about reports of growing sectarianism in the country, which is home to the U.S. Navy's Fifth Fleet, and warned that violence from any side would make matters worse.
"One thing is clear: there is no military solution to the problems in Bahrain," White House spokesman Tommy Vietor said.
"A political solution is necessary and all sides must now work to produce a dialogue that addresses the needs of all of Bahrain's citizens," he added, speaking in Washington.
Local television and activists showed gruesome footage of wounded civilians, but it was difficult to pin down precise numbers of casualties as rumors spread across electronic media.
"In order for the situation to return to normal we have to establish order and security and ... stop the violations which have spread disturbances among the people of our dear country," Interior Minister Sheikh Rashed al-Khalifa said in television address, calling on Bahrainis to cooperate with security forces.
It was not clear if a curfew would be imposed or whether there would be any clampdown on media or public gathering.
On Monday, more than 1,000 Saudi troops rolled into the kingdom in a long convoy of armored vehicles at the request of Bahrain's Sunni rulers, flashing victory signs as they crossed the causeway that connects the two oil producers.
The United Arab Emirates said it also would send 500 police.
Analysts saw the troop movement into Bahrain as a mark of concern in Saudi Arabia that concessions by the country's monarchy could inspire the conservative Sunni-ruled kingdom's own Shi'ite minority.
Over 60 percent of Bahrainis are Shi'ites who complain of discrimination at the hands of the Sunni royal family. Calls for the overthrow of the monarchy have alarmed the Sunni minority, which fears that unrest could serve non-Arab Shi'ite power Iran.
Iran, which sits across the Gulf from Bahrain, sharply criticized the Saudi intervention.
"The presence of foreign forces and interference in Bahrain's internal affairs is unacceptable and will further complicate the issue," Foreign Ministry spokesman Ramin Mehmanparast said at his weekly news conference in Tehran.
A Bahraini foreign ministry official called the remarks a "blatant interference in Bahrain's internal affairs," the state news agency BNA said, adding that Manama had recalled its ambassador to Iran for consultations.
In a sign that neither side would back down, thousands marched to the Saudi embassy to protest against intervention.
"People are angry we want this occupation to end. We don't want anybody to help the al-Khalifa or us," said a protester who gave his name as Salman, referring to the ruling family.
Bahrain has been gripped by its worst unrest since the 1990s after protesters took to the streets last month, inspired by uprisings that toppled the leaders of Egypt and Tunisia.
Unlike those countries, where the mainly Sunni populations united against the regime, Bahrain is split along sectarian lines, raising the risk of a slide into civil conflict.
Violent clashes between youths wielding clubs, knives and rocks have become daily occurrences, forcing Bahrain University and many schools to close in order to avoid further trouble.
Demonstrators camped out at Pearl roundabout, the focal point of weeks of unrest, were defiant on Saudi intervention.
"We reject this intervention and we consider it occupation. Any foreign intervention to crush the people is occupation," said Akeel Jaber, an activist at the roundabout.
The United States has urged Saudi Arabia, the world's top oil exporter and a key U.S. ally in the Gulf Arab region, to show restraint, though analysts said the escalation showed the limits of U.S. influence when internal security was threatened.
The United Nations echoed those calls for restraint.
In a sign that security could deteriorate, the U.S. State Department advised against all travel to Bahrain due to a "breakdown in law and order."
Underlining the growing tensions, armed youths attacked the printing press of Bahrain's only opposition newspaper Al Wasat overnight in an effort to stop its publication.
Metal barricades and piles of sand and rocks blocked the main thoroughfare to the financial district and most shops in Bahrain were shut. At checkpoints near the roundabout, activists asked to see identity papers and waved cars through.
"We are staying peacefully. Even if they attack we are peacefully," said Ali Mansoor, an activist at the roundabout.
"Saudi Arabia has no right to come to Bahrain. Our problem is with the government not Saudi Arabia."
Around Bahrain, residents have placed skips, bins and pieces of metal on the road, to prevent strangers from entering their neighborhoods. Young men, some wearing masks and carrying sticks, guarded the entrances to their areas.
(Additional reporting by Robin Pomeroy in Iran, Firouz Sedarat in Dubai and Stephanie Nebehay in Geneva)
(Editing by Crispian Balmer)