* Troop reinforcements flown to Deraa - resident
* Deraa protest follows rare demonstration in Damascus
* YouTube footage shows people chanting against tycoon
* Government says "infiltrators" tried to cause chaos
(Adds U.S. comment paragraphs 10-11)
By Suleiman al-Khalidi
DERAA, Syria, March 18 (Reuters) - Syrian security forces killed three protesters in the southern city of Deraa on Friday, residents said, in the most violent response to protests against Syria's ruling elite since revolts swept through the Arab world.
The demonstrators were taking part in a peaceful protest demanding political freedoms and an end to corruption in Syria, which has been ruled under emergency laws by President Bashar al-Assad's Baath Party for nearly half a century.
Smaller protests took place in the central city of Homs and the coastal town of Banias, home to one of Syria's two oil refineries, activists said.
A crowd briefly chanted slogans for freedom inside the Umayyad Mosque in Old Damascus before security forces closed in.
Syrian authorities, which stepped up arrests of dissidents since the Arab uprisings began in January, have a history of crushing dissent. In 1982, Assad's father sent troops to put down an rebellion in the city of Hama, killing thousands.
In Deraa on Friday, three to four thousand people leaving the city's Omari mosque after midday prayers chanted "God, Syria, Freedom" and slogans accusing the president's family of corruption, residents said.
Security forces fired water cannon at them, and then opened fire with live ammunition. Protesters threw stones in response and set fire to a car and a police kiosk, one witness said.
Hussam Abdel Wali Ayyash, Akram Jawabreh and Ayhem al-Hariri were shot dead by security forces who were reinforced with troops flown in by helicopters. Scores were wounded in the attack in the old quarter of Deraa near the border with Jordan.
An official statement said "infiltrators" tried to take advantage of what it termed as a gathering in Deraa by burning cars and trying to cause chaos, which required intervention by security forces. The statement did not mention any casualties.
The United States, which under President Barack Obama has sought engagement with Assad, condemned the attack on protesters and urged the government to allow people to demonstrate freely.
"Those responsible for today's violence must be held accountable," White House National Security Council spokesman Tommy Vietor said.
"SITUATION IS DANGEROUS"
After two or three hours of clashes, the city was quieter at nightfall, with a heavy security presence. Stones lay on the road where protesters and security forces clashed, and people said they were not allowed to visit the wounded in hospital.
Residents said relatives of the dead had refused to accept condolences, a sign in tribal Arab society they might seek vengeance for their loss.
"The situation is dangerous, the people feel under pressure," said a lawyer and activist who attended part of the protest."If (authorities) hand over the bodies there will be demonstrations. People will call for revenge."
Citing economic liberalisation and a hard line against Israel, Syria's rulers have indicated they believe they are immune from uprisings which have toppled entrenched leaders in Egypt and Tunisia. But small non-violent protests this week challenged their authority for the first time in years.
A video aired on Facebook showed what it described as demonstrators in Deraa shouting slogans earlier in the day against Syrian tycoon Rami Makhlouf, a cousin of Assad's who owns several large businesses.
"Makhlouf you thief!" shouted dozens of demonstrators marching in the streets.
Deraa is home for thousands of refugees who escaped a water crisis that has hit eastern Syria over the past six years, resulting in the displacement of up to one million people. Experts say state mismanagement of resources has been behind the crisis, together with consecutive droughts.
The city is an administrative centre of the Hauran plateau, which used to be a Middle East bread basket. The region has also been affected by diminishing water levels, with yields per hectare falling by a quarter in Deraa last year.
In the capital Damascus, plain-clothed security forces wielding batons dispersed 150 demonstrators on Wednesday who had gathered outside the Interior Ministry to demand the release of political prisoners.
Assad, who succeeded his father 11 years ago, is also head of the Baath party, which has been in power since 1963, banning opposition and imposing the emergency law still in force.
New York-based Human Rights Watch has said Syria's authorities were among the worst violators of human rights in 2010, jailing lawyers, torturing opponents and using violence to repress ethnic Kurds.
Bashar's father, Hafez al-Assad, sent troops into the city of Hama in 1982 to finish off the armed wing of the Muslim Brotherhood. Around 30,000 people were killed and much of the old quarter of the city was razed to the ground.
In 2004, Kurds in eastern Syria, many of whom are not allowed Syrian citizenship, mounted violent demonstrations that spread in Kurdish regions across Syria, resulting in 30 deaths. (Additional reporting by Khaled Yacoub Oweis in Damascus; Editing by Jon Boyle)
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