* Sweden saw week of riots in poor, immigrant communities
* Coincides with rise of anti-immigration party
* Mainstream parties still favour generous asylum policies
By Alistair Scrutton and Simon Johnson
STOCKHOLM, May 27 (Reuters) - Sweden's worst riots in years might benefit a far-right party in elections next year if scenes of immigrants burning cars and smashing up buildings cause voters to rethink their traditional welcome to foreigners.
Even before the week of riots in the poorer neighbourhoods of Stockholm, immigration had become a hot political issue, as the number of asylum seekers reached record levels.
The anti-immigration Sweden Democrats party shot to third place in polls earlier this year and the riots could help them secure more political clout at 2014 elections.
The riots, where many youths torched cars and threw stones at police and rescue services, happened as violent attacks on soldiers in Britain and France, blamed on Islamist militants, raised urgent questions about intolerance and integration.
"It is tragic. This is not good for us as immigrants. It becomes harder for us to live here," said Rahimzadagan Abdolsaheb, 49, an Iranian-born taxi driver. "There will surely be more racism because of this."
Many Nordic anti-immigration parties - backed by just a small minority in a region famous for its tolerance of minorities - lost support after Anders Behring Breivik, a white supremacist, murdered 77 people in Norway in 2011.
But they are once again on the rise.
Immigration Minister Tobias Billstrom broke government ranks earlier this year to say that Sweden's intake of immigrants was "not sustainable".
Billstrom sparked furore when he said people protecting illegal immigrants were no longer "blonde and blue-eyed" but fellow migrants exploiting cheap labour.
Rising concern about immigration has coincided with worries about employment, with heavy job losses in the car industry and at companies including Ericsson and airline SAS .
Reflecting a hardening in rhetoric, the pro-immigration prime minister, Fredrik Reinfeldt, called the rioting "hooliganism".
Opinion polls show most Swedes support immigration and that many are more tolerant of foreigners than 20 years ago.
But while those opposed to immigration are in a minority, their number may be on the rise and could be further boosted by the riots.
"It will be a step to increasing polarisation on the issue of integration in Sweden," said Andreas Johansson Heino, a political scientist at Sweden's Timbro think-tank. "These kinds of things benefit parties like the Sweden Democrats."
Some 43,900 asylum seekers arrived in 2012, a nearly 50 percent jump from 2011 and the second highest on record. Nearly half were from Syria, Afghanistan and Somalia and will get at least temporary residency. There was a total of 103,000 new immigrants.
Some 15 percent of Sweden's population is foreign born, the highest in the Nordic region. Asylum seekers in particular are drawn by Sweden's robust economy and tradition of helping refugees.
Sweden's liberal-minded mainstream parties are concerned about what happened in Denmark when an anti-immigrant party held the balance of power in the last government, pushing policies including tightening border controls that fuelled tension with other European nations.
The Sweden Democrats have advanced in voter surveys to nearly 10 percent from 5 percent at the last election in 2010. Before the riots, a poll by Novus showed around 20 percent of Swedes believed the Sweden Democrats had the best immigration policy.
"What is happening on the fringes of our big cities is a direct result of irresponsible immigration politics which have created deep divisions in Swedish society," said Sweden Democrat leader Jimmie Akesson.
"These splits can't be bridged by building more recreation centres or by the police grilling sausages with youths."
But there are also those who believe Sweden's asylum policies will remain intact after the disturbances and that the Sweden Democrats may have reached a poll ceiling.
"The government and opposition have made it very clear ever since the Sweden Democrats got into parliament it would not in any way affect Swedish immigration," said Ulf Bjereld, professor of political science at Gothenburg. "They have kept their promise." (Additional reporting by Johan Ahlander, Mia Shanley and Philip O'Connor; Editing by Robin Pomeroy)