By Lin Noueihed and Frederik Richter
MANAMA (Reuters) - Bahrain's king declared martial law on Tuesday as his government struggled 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 Sunni Muslim elite, stoking sectarian tensions in one of the Gulf's most politically volatile nations.
Disturbances shook the kingdom through the day. A hospital source said two men, one Bahraini and the other Bangladeshi, were killed in clashes in the Shi'ite area of Sitra and more than 200 people were wounded in various incidents.
State television said a Bahraini policeman was also killed, denying media reports that a Saudi soldier had been shot dead.
The United States, a close ally of both Bahrain and Saudi Arabia, said it was concerned about reports of growing sectarianism in the country, home to the U.S. Navy's Fifth Fleet. It dispatched Assistant Secretary of State Jeff Feltman to Bahrain to push for dialogue to resolve the crisis.
"One thing is clear, there is no military solution to the problems in Bahrain," said White House spokesman Tommy Vietor.
It was not clear if a curfew would be imposed or whether there would be any clampdown on media or public gatherings.
"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," said Interior Minister Sheikh Rashed al-Khalifa.
Bahraini state media have said Shi'ite opposition activists, who complain the state has been naturalizing Sunni foreigners to tip the sectarian balance, are targeting foreigners.
The opposition says the security forces are full of naturalized foreigners willing to use force against protesters.
On Monday, more than 1,000 Saudi troops rolled into the kingdom at the request of Bahrain's Sunni rulers, flashing victory signs as they crossed. The United Arab Emirates and Qatar have said they would also send police.
Thousands of Bahrainis marched on the Saudi embassy in Manama on Tuesday to protest against the 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.
Analysts said the troop movement showed concern in Saudi Arabia that any concessions in Bahrain could inspire the 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, criticized the decision to send in Saudi troops.
"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 "blatant interference in Bahrain's internal affairs," the state news agency BNA said, adding that Manama had recalled its ambassador to Iran for consultations.
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.
The United Nations and Britain echoed the U.S. call for restraint and the Group of Eight powers expressed concern, though analysts said the escalation showed the limits of U.S. influence when security was threatened.
The largest Shi'ite opposition group, Wefaq, condemned the imposition of martial law and urged international intervention.
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."
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 road to the financial district and most shops were shut.
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 Elizabeth Piper)