* Hundreds of thousands called to hold hands across the region
* Independence movement has gathered pace in recent years
* Economic woes have harmed relations with central government (Recasts, adds quotes, background)
By Julien Toyer
BARCELONA, Spain, Sept 11 (Reuters) - Thousands of Catalan separatists were gathering on Wednesday to try to form a 400 Km (250 mile) human chain across the region and renew pressure for a referendum on breaking away from Spain.
A deep recession and cuts in public spending in Catalonia, a wealthy industrial region in northeastern Spain that accounts for a fifth of the country's economic output, have stirred discontent with the central government in Madrid.
Polls show backing for secession has risen steadily in Catalonia, with some registering support as high as 50 percent. An large majority of Catalans want the right to hold a referendum on the issue, the polls show.
Catalans, who speak their own language, plan to join hands in a line stretching from the Pyrenees in the north to the border with Valencia in the south, inspired by a 1989 demonstration that helped the Baltic republics of Estonia, Latvia and Lithuania win independence from the Soviet Union.
Catalan separatism has become a major headache for Prime Minister Mariano Rajoy, who is mired in a corruption scandal and trying to pull Spain out of recession while also pushing through unpopular spending cuts.
The demonstration, which if successful would involve hundreds of thousands of Catalans, day comes after Rajoy and Catalan President Artur Mas recently signalled they were open to talks after a year-long standoff over finances and a referendum.
"Today we want to confirm that people still support independence. We want a date for a referendum," said Montse Espina, who will join the chain in the Catalan capital Barcelona later in the day.
Catalan separatists are watching closely a planned September 2014 Scottish referendum on independence from the United Kingdom, hoping it will promote the idea of self-determination for regions within countries that belong to the European Union.
Although Catalans have nurtured a separate identity for centuries, an independence movement surged recently as Catalans became disillusioned with limitations on the autonomy they gained in the late 1970s after the Francisco Franco dictatorship, which had suppressed Catalan nationalism.
Walking through Barcelona at midday as they geared up for the protest, Espina and her husband carried the separatist banner: a white star on a blue triangle, against a background of the official Catalan regional flag of yellow and red stripes.
"It used to be frowned on to talk about independence, it would have been impossible to take this flag out on the street," said Espina's husband Rafael de la Torre, who said he was won over to the independence cause about 10 years ago.
Thousands of Catalan National Assembly volunteers were organising protesters, who drove in the rain to remote areas of the region to make sure the chain is unbroken.
Hundreds of photographers have been asked to document the link-up just after 5 p.m. local time and thousands of police will direct traffic to alternative routes, away from the chain.
PUSHING THE PRIME MINISTER
Rajoy says such a secession vote would be unconstitutional.
Opponents of independence argue the region has never been an entirely separate state. The Medieval Principality of Catalonia came under the Crown of Aragon, though it was allowed to run its own affairs through an institution known as the Generalitat.
Protesters on Wednesday plan to complete the human chain at 17:14, symbolizing the year 1714 when King Philip V abolished the Generalitat after the War of the Spanish Succession.
Separatists argue Catalonia - population 7.5 million - has always had a separate cultural and linguistic identity and that they are tired of negotiating with Madrid.
"Today will show that we've reached a point of no return," Carme Forcadell, the head of the Catalan National Assembly, the body coordinating the human chain, told Reuters.
Catalan President Mas has threatened to call an early election and use it as a plebiscite on secession if Rajoy uses the courts to block a referendum. However, this is seen as a risky move as his political alliance has lost ground while a more leftist separatist party has won support in the past year.
Mas is in a delicate position because the Catalan budget hole is so big that the central government had to bail out the region last year.
"We are talking with the Spanish government but I have a lot of doubts over whether it will be fruitful," Mas told foreign journalists on Wednesday morning.
Rajoy also has limited room for manoeuvre as any offer to Catalonia of better fiscal treatment or more political autonomy could spur protests in other Spanish autonomous regions, such as Basque Country.
The Basques have long fought for more autonomy from Spain, but the nationalist movement there has muted in recent years, as the region recovers from decades of separatist violence and also because the Basques already have more tax powers than Catalans.
(Editing by Fiona Ortiz and Ralph Boulton)