* Says political dialogue will follow ethnic ceasefires
* Calls for foreign investment to support progress
* Vows to slash poverty, create jobs, fight graft
By Aung Hla Tun
YANGON, March 1 (Reuters) - Myanmar President Thein Sein urged on Thursday government troops and ethnic Kachin rebels to end hostilities and take part in talks, but he ruled out independence for any of the country's ethnic minority groups.
In a wide-ranging address to parliament 11 months after taking office, Thein Sein promised to continue reforms and urged foreign investors to support his country to prevent it from falling back "while democratisation is in its infancy".
In his first public explanation of the nine-month conflict in Kachin State, which has displaced tens of thousands of people along the border with China, the former junta general said he had ordered troops not to attack the rebels.
"Both sides need to cease fire first to start a peace dialogue," he said during a 45-minute speech that was aired on national television with an English translation.
"I've already ordered the military just to defend themselves and not to launch any offensive actions."
Conflicts between government forces and ethnic minority rebels have simmered in the former Burma for decades. Western countries have made ceasefires one of their conditions for the lifting of sanctions.
The fighting with the Kachin Independence Army has proven a thorny issue for the government, which has struck ceasefire deals with most of Myanmar's 16 ethnic minority rebel armies as part of a three-stage process towards peace.
A 16-year truce with the Kachin rebels unravelled in 2010 and fighting erupted last year. But unlike other forces, the Kachin have demanded a political resolution in the first stage of peace efforts, using the term "self-determination".
"The first phase does not cover political discussions. To make the first phase real, both sides need to bear sincere goodwill for peace," Thein Sein said, adding the third stage would be a conference in parliament to cement peace deals.
He said second-stage talks would involve agreements to combat illicit drug production, form new political parties and amend the constitution. But one condition, he said, would be to agree to "never secede from the union".
Thein Sein, the former junta's fourth-in-command, has emerged as a key reformer in rapidly changing Myanmar and has established cordial ties with opposition leader Aung San Suu Kyi.
The Nobel laureate believes Thein Sein, 66, is sincere and agreed to register herself and her National League for Democracy party to run in parliamentary by-elections on April 1. But she has warned against being too optimistic and said on Wednesday it was too early to declare the reforms irreversible.
Thein Sein said Myanmar's transition from military to civilian rule had been met with scepticism, but his government had shown it was committed to raising living standards, creating jobs, fighting corruption and courting investment.
"There are still many people who doubt and don't believe in our government," he said. "Before the curious eyes of the world we have paved the way for a new democratic nation."
The government aimed to cut the poverty rate from 26 percent of the resource-rich country's 60 million people to 16 percent by 2015 and use "all means possible" to fight graft, which he said was one of the biggest threats to the country's progress.
It was working to increase media freedom, develop civil society and encourage private enterprise, he said. It wanted to drive growth and create jobs through foreign investment in resources and manufacturing, without causing environmental harm.
Thein Sein made no mention of sanctions, but said Myanmar was facing big challenges as a result of its international isolation and old attitudes needed to change to maintain the momentum of change.
"Our country was left behind in the process of globalisation, so we need to learn every lesson and make the best of our experience as we open our country to international society," he said. "Our historic transformation is very immense and very delicate."
(Writing by Martin Petty; Editing by Alan Raybould and Robert Birsel)