* Demonstration in capital is to demand democratic change
* Thousands of riot police on standby to stop banned protest
* Fall of Egypt's leader puts spotlight on other Arab states
* Protest not backed by biggest opposition parties
By Christian Lowe and Lamine Chikhi
ALGIERS, Feb 12 (Reuters) - Thousands of police in riot gear were in position in the centre of the Algerian capital on Saturday to stop a planned demonstration from mimicking the uprising which forced out Egyptian President Hosni Mubarak.
Officials have banned the opposition march, setting the stage for possible clashes between police and demonstrators who are demanding greater democratic freedoms, a change of government, and more jobs.
Mubarak's resignation on Friday, and last month's overthrow of Tunisia's leader, have electrified the Arab world and led many to ask which country could be next in a region where a flammable mix of authoritarian rule and popular anger are the norm.
Widespread unrest in Algeria could have implications for the world economy because it is a major oil and gas exporter, but many analysts say an Egypt-style revolt is unlikely because the government can use its energy wealth to placate most grievances.
"We are ready for the march," said Mohsen Belabes, a spokesman for the small RCD opposition party which is one of the organisers of the protest. "It's going to be a great day for democracy in Algeria."
A heavy police presence is routine in Algeria to counter the threat of attacks by al Qaeda insurgents, but many times the usual numbers were already in place hours before the start of the protest at 11:00 a.m. (1000 GMT).
At May 1 Square, the starting point for the planned march not far from the city's Mediterranean port, at least 15 police vans, jeeps and buses were lined up. A similar number were in a nearby side-street outside the city's Mustapha hospital.
At several road junctions, the police had parked small military-style armoured vehicles which are rarely seen in the city. Police standing outside a fuel station about 2 km (1.2 miles) from the square were wearing anti-riot body armour.
RIPPLE EFFECT
Other Arab countries have also felt the ripples from the revolts in Egypt and Tunisia. Jordan's King Abdullah replaced his prime minister after protests and in Yemen, President Ali Abdullah Saleh promised opponents he would not seek a new term.
Protest organisers in Algeria -- who say they draw some of their inspiration from events in Egypt and Tunisia -- say police may turn people away before they can reach the march in the capital, or parallel protests planned for other cities.
"Algerians must be allowed to express themselves freely and hold peaceful protests in Algiers and elsewhere," rights group Amnesty International said in a statement.
"We urge the Algerian authorities not to respond to these demands by using excessive force."
The government says it refused permission for the rally for public order reasons, not because it is trying to stifle dissent. It says it is working hard to create jobs, build new homes and improve public services.
In an attempt to head of anti-government unrest, the authorities have cut prices for sugar and cooking oil, bought huge quantities of grain to ensure bread supplies and promised to lift a 19-year-old state of emergency.
Saturday's protest is not backed by Algeria's main trade unions, its biggest opposition parties or the radical Islamist groups which were banned in the early 1990s but still retain grassroots influence.
The march "is likely to be violent, but unlikely to destabilize the regime," said Eurasia Group, a political risk consultancy. (Editing by Matthew Jones)
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