* Myanmar president in trade visit
* Cameron under pressure to confront him on human rights (Updates with dissolution of Myanmar security force, talks, protest, lawmaker comments)
By Andrew Osborn
LONDON, July 15 (Reuters) - President Thein Sein, the first leader of Myanmar to visit Britain in more than 25 years, held talks with Prime Minister David Cameron on Monday as activists protested against the Asian nation's human rights record.
Sein said in a statement released on his website on Sunday that he had disbanded a security force accused of rights violations against Rohingya Muslims in Rakhine State in the west of Myanmar, scene of deadly violence between Muslims and majority Buddhists in the past year.
Sein was due to talk trade, aid and democracy with Cameron and his ministers during a two-day visit at a time when Myanmar is opening up its oil, gas and telecoms sectors to foreign investors, with further liberalisation likely.
Cameron was under pressure to confront Sein over the treatment of Myanmar's Muslim minority, but faced a tricky balancing act since he has made it clear he wants to expand Britain's trade links with emerging economies such as Myanmar.
Sein, a former military commander, is trying to get the West to help Myanmar's economy recover from decades of military dictatorship, Soviet-style planning and international sanctions.
Western leaders have praised him for ending the house arrest of opposition leader Aung San Suu Kyi, releasing some political prisoners, and allowing the opposition to fight an election.
But they want him to further loosen the military's grip on the mineral-rich state formerly known as Burma before a 2015 presidential election which the British-educated Suu Kyi hopes to contest. Suu Kyi visited Britain last year.
About 30 activists from campaign group Avaaz protested outside the British parliament with a banner reading: "Cameron - Don't let Burma become the next Rwanda", a reference to the 1994 genocide when hundreds of thousands were killed.
Two activists wearing papier mache head mouldings of Cameron and Sein hugged each other in front of dozens of stylised cardboard Muslim graves.
"Cameron should never have invited Sein," said Jamal Ahmed, General Secretary of the Burmese Rohingya Organisation UK. "Giving him the red carpet treatment knowing about the record level of human rights abuses is wrong."
Before the talks, Human Rights Watch urged Cameron to press Sein on justice for crimes against humanity, to release remaining political prisoners and to end repressive laws.
At least 237 people have been killed in Myanmar in religious violence over the past year and about 150,000 people have been displaced. Most of the victims were Muslim and the deadliest incidents happened in Rakhine State, where about 800,000 Rohingya Muslims live, according to the United Nations.
Cameron's office said it would provide details of the talks later. A spokesman said he had planned to raise human rights.
"In all our relationships, nothing is ever off the table," the spokesman said. "This will be an opportunity to discuss political and economic reform in Burma and, yes, as part of that human rights will be discussed."
Rushanara Ali, a lawmaker from the opposition Labour party, said Britain's voice could make a difference.
"It is important not to underestimate the soft power influence that Britain has on the Burmese government. We've got a unique responsibility," she told Reuters.
Cameron visited Myanmar last year, and Sein, who remains close to the military, this year became the first leader of his country since 1966 to visit the White House.
His British trip is thought to be the first since the late General Ne Win, who ruled Burma for 26 years, visited in 1986. Burma became independent from Britain in 1948.
Sein is expected to visit France afterwards. (Additional reporting by Jemima Kelly and Peter Griffiths; Editing by Alistair Lyon)