* Fears of violence from competing rallies in capital Tunis
* Crisis threatens democratic change in cradle of Arab Spring
* Parliament suspended, Islamist militant violence rising
By Tarek Amara
TUNIS, Aug 13 (Reuters) - Islamists and the secular opposition in Tunisia planned street rallies in rival shows of strength on Tuesday, raising the risk of violence and threat to the democratic transition in the birthplace of the Arab Spring.
Beset by a severe economic downturn, a suspension of parliament and a surge in Muslim militant attacks, Tunisia's government led by the moderate Islamist Ennahda party is grappling with secular calls for its resignation.
With polarisation between Islamists and secularists festering, fears are rising of a Tunisian drift towards an "Egyptian scenario" in which a disgruntled secular opposition topples an elected Islamist-led government.
Tunisian secularists planned a mass demonstration and march starting at 1800 GMT in the capital's central Bab Sadoun district and leading to Bardo Square to demand the dissolution of the government and parliament.
There were fears of violence because hundreds of pro-Ennahda Islamists have been camped out in Bardo for several weeks.
The opposition is angry over the assassination of two of its leaders, blamed on radical Islamists, and emboldened by the Egyptian military's removal of Islamist president Mohamed Mursi last month after mass protests against his shambolic rule.
For their part Islamists were set to rally along the central Habib Bourguiba Avenue, nominally to mark Tunisian Women's Day but effectively to showcase popular support for Ennahda.
"We do not see any results after weeks of political crisis, If this political stalemate continues, the result will be clashes on the street," said political analyst Sofian Ben Hmida.
Tunisia is in the throes of its worst political turmoil since secular autocrat Zine el-Abidine Ben Ali was overthrown in early 2010 in the first of the Arab Spring uprisings.
Islamist militants killed eight Tunisian soldiers in an ambush last month and the government, under pressure from secular critics, has responded with security force raids and air strikes on jihadi mountain redoubts.
Negotiations earlier this week between Tunisia's powerful union federation UGTT, which has good relations with opposition parties, and Ennahda leader Rached Ghammouchi on a way out of the volatile impasse proved inconclusive.
IMPORTANT UNION ROLE IN ANTI-ISLAMIST UNREST
UGTT members were expected to join the opposition rally.
Any serious UGTT participation in Tunisia's unrest could be decisive given the economic muscle of the 600,000-member labour group - just one day of strikes could cost the financially staggering state hundreds of millions of dollars.
U.S. Ambassador Jacob Walles met Ghannouchi and Beji Caid Essebsi, a former prime minister and the head of the main opposition Nida Touns party, on Monday to try to narrow the gap between them, but without concrete result.
Ghannouchi told Reuters last week that the party was open to dialogue with secular opponents but that removing Prime Minister Ali Larayedh was out of the question.
The opposition wants to void the transitional parliament that has been drafting a new constitution and electoral law because it fears they would cement Islamist domination in a country traditionally one of the most secular in the Arab world.
Secularists aim to announce an alternative salvation government" next week, a challenge dimming hopes of compromise.
Jilani Hammami, an opposition Salvation Front leader, said it was close to deciding the roster of its cabinet and that it would make important announcements during Tuesday's rally.
Tunisia's transitional parliament chief, a member of a secular party in the rocky government coalition, suspended the legislature a week ago in protest at a lack of meaningful talks between Ennahda and the opposition.
Tunisia's army may have played a role in Ben Ali's overthrow by refusing to shoot demonstrators. But unlike Egypt's military, which also helped protesters oust fellow autocrat Hosni Mubarak in 2011, it has not traditionally intervened in politics.
Without a large and lucrative stake in the economy, unlike the Egyptian military, Tunisia's armed forces are unlikely to loom large in the fate of its Islamist leadership.
(Editing by Mark Heinrich)