* Akhmetov urges employees to join peaceful protest in east
* Condemns separatists who hold key areas of eastern cities
* Initial response from workers appears modest
* Magnate formerly close to ousted president Yanukovich (Changes dateline to Mariupol, byline, rewrites with new detail)
By Sabina Zawadzki and Lina Kushch
MARIUPOL/DONETSK, Ukraine, May 20 (Reuters) - Factories sounded their sirens in two cities of eastern Ukraine on Tuesday and steel workers held a peace rally in support of a call by Ukraine's richest man for protests against armed separatists who plan to disrupt a May 25 presidential election.
In his strongest condemnation yet of rebels who have seized strategic points in towns in the heavily industrialised Russian-speaking east, Rinat Akhmetov urged people to unite "for Donbass without weapons! For Donbass without masks!"
Akhmetov, a coal and steel magnate who has an estimated 300,000 employees on his payroll and enjoys huge authority in the region, said Ukrainians should stage a "peaceful warning protest" at their companies from noon on Tuesday when sirens would sound across the region.
The initial response to his call, however, was modest.
Kiev's pro-Western authorities, who hailed Akhmetov's move hoping it would trigger a groundswell of support from ordinary workers to change the dynamics on the ground ahead of Sunday's election, may be disappointed.
Separatist rebellions, fuelled by cross-border propaganda from Russia, erupted in the east after Moscow-backed Viktor Yanukovich was toppled by mass street protests in Kiev in February.
In five months of upheaval, which has caused the worst stand-off between Russia and the West since the Cold War, Russia also seized Ukraine's Black Sea peninsula of Crimea.
Ukraine's struggling pro-Western interim authorities see Sunday's election as a vital step in restoring stability and legitimising the new political order despite separatists who are determined to disrupt it, and hostility from Moscow.
Separatists, who have set up checkpoints and barricades in major towns and have held referendums of their own, have indicated they will do all they can to prevent the election taking place.
Election workers in the east and a senior U.N. official have said separatists are carrying out intimidation and harassment, including abducting election officials to block the poll.
SIRENS
In response to Akhmetov's call, sirens sounded on Tuesday from factories in Donetsk and the Sea of Azov port city of Mariupol where the oligarch operates two of Ukraine's biggest steel mills.
About 300 workers in white hard hats and the red and grey overalls of Akhmetov's Metinvest company were first bussed to a football stadium from the Ilyich steel factory where they heard speeches calling for Donbass to be rid of weapons and then taken on to Azovstal, also owned by the oligarch.
In some parts of the region, cars slowed in cities to show their support for Akhmetov's call.
He said the action should continue daily "until peace is established" and he also urged motorists to join in the protest by sounding their horns.
The sharpness of Akhmetov's attack on the separatists, whom he accused of waging a "genocide of the Donbass", confirmed he was now committed to supporting the government after months of hesitation.
His full support for the Kiev authorities had been in doubt until recently, given his past association with Yanukovich, an old friend from the Donbass whose election campaign he bankrolled in 2009-10.
Akhmetov, whose fortune is estimated by Forbes magazine at $11.4 billion, zeroed in on those separatists who have proclaimed an independent Donetsk People's Republic (DPR) and have called for it to be absorbed into Russia.
"Does anyone in Donbass know at least one representative of this DPR? What have they done for our region? What jobs have they created?
"Does walking around Donbass towns with guns in hands defend the rights of Donetsk residents in front of the central government? Is looting in cities and taking peaceful citizens hostages a fight for the happiness of our region? No, it is not!
"It is genocide of Donbass!," he said.
MIXED RECEPTION
The reaction of people in Donetsk, an industrial hub of one million and Akhmetov's home town, to his call was mixed.
"I react negatively to the Akhmetov statement," said Hryhoriyi, 55, unemployed. "I'm in favour of Donetsk being in Russia because it is not possible to live in this Ukraine. And Akhmetov wants to drag us into this Ukraine."
Narek Ziroyan, a 19-year-old student, said: "I didn't hear about Akhmetov's statement. But if he wants to ban weapons, I can only be in favour." But he went on to express disappointment at the lack of dialogue among the main players of the crisis.
"Each person thinks only of himself," Ziroyan said.
Earlier this month, Akhmetov's Metinvest company, one of the most powerful in the region, sent miners and metalworkers to the town of Mariupol to join police on patrol, in a sign the tycoon had decided to enter the political fray on behalf of the authorities.
Enver Tskitishvili, general manager of Akhmetov's Azovstal factory, said: "Today we decided we would protest like this every day at our factory until we see some results, until we see that there is real disarmament and there is a real dialogue. Until that time these kind of protests will take place."
Election and regional authorities fear that only one half of polling stations will be able to function on Sunday in Donetsk region which accounts for more than 3 million voters. In Luhansk region, whose main city is also held by rebels, voting is in doubt at one third of its election points.
Despite the uncertainty, the latest opinion poll by three sociological institutes still showed confectionery magnate Petro Poroshenko the emphatic front-runner in the election with 53 percent of support from those people who say they intend to vote on Sunday.
Former prime minister Yulia Tymoshenko, whose camp are rejecting the surveys as false, was on just over 10 percent and banker-businessman Serhiy Tigipko was in third place with 8.8 percent.
If no candidate crosses the 50 percent mark on Sunday to win outright, there will be a run-off vote on June 15.
(Writing by Richard Balmforth; editing by Anna Willard)
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