Satyarthi and Yousafzai picked for their struggle against suppression of children and for the right of all to education
* Yousafzai becomes youngest Nobel winner at 17
* She survived shooting by Taliban two years ago
* Satyarthi led peaceful protests and demonstrations
* He fights against use of child labour (Adds background and further comments)
By Balazs Koranyi, Alister Doyle and Gwladys Fouche
OSLO, Oct 10 (Reuters) - Pakistani teenager Malala Yousafzai, who was shot in the head by Taliban Islamists in 2012 for advocating girls' right to education, and Indian children's right activist Kailash Satyarthi won the 2014 Nobel Peace Prize on Friday.
Yousafzai, aged 17, becomes the youngest Nobel Prize winner by far and 60-year-old Satyarthi the first Indian-born winner of the peace laureate.
They were picked for their struggle against the oppression of children and young people, and for the right of all children to education, the Norwegian Nobel Committee said.
The sharing of the award between an Indian and a Pakistani came after a week of hostilities along the border of the disputed, mainly Muslim region of Kashmir - the worst fighting between the nuclear-armed rivals in more than a decade.
"The Nobel Committee regards it as an important point for a Hindu and a Muslim, an Indian and a Pakistani, to join in a common struggle for education and against extremism," said Thorbjoern Jagland, the head of the Norwegian Nobel Committee.
Satyarthi said he hoped that, beyond his fight against child slavery, he and Malala could work for peace in their region.
"I will invite her to join hands to establish peace for our subcontinent which is a must for children, which is a must for every Indian, for every Pakistani, for every citizen of the world," he told reporters at the New Delhi office of his organisation, Bachpan Bachao Andolan, or Save the Childhood Movement.
Norway's NRK TV said Yousafzai had been told she had won but decided not to make any immediate public comment - because she was at school.
Yousafzai was attacked in 2012 on a school bus in the Swat Valley of northwest Pakistan by masked gunmen as a punishment for a blog that she started writing for the BBC's Urdu service as an 11-year-old to campaign against the Taliban's efforts to deny women an education.
Unable to return to Pakistan after her recovery, Yousafzai moved to England, setting up the Malala Fund and supporting local education advocacy groups with a focus on Pakistan, Nigeria, Jordan, Syria and Kenya.
"This is a breath of fresh air, a gift for Pakistan, at a time when we are embroiled in terrorism and violence and wars ... " Ahmed Shah, Malala's former teacher, told Reuters by telephone from the Swat Valley.
"Those who oppose her, extremist elements or whoever else, they have been rendered irrelevant. They are a weak minority."
Yousafzai last year addressed the U.N. Youth Assembly at an event Secretary-General Ban Ki-moon called "Malala Day". This year she travelled to Nigeria to demand the release of 200 schoolgirls kidnapped by the Islamist group Boko Haram.
"To the girls of Nigeria and across Africa, and all over the world, I want to say: don't let anyone tell you that you are weaker than or less than anything," she said in a speech.
"You are not less than a boy," Yousafzai said. "You are not less than a child from a richer or more powerful country. You are the future of your country. You are going to build it strong. It is you who can lead the charge."
FIGHTING CHILD SLAVERY
Satyarthi, who gave up a career as an electrical engineer in 1980 to campaign against child labour, has headed various forms of peaceful protests and demonstrations, focusing on the exploitation of children for financial gain.
"It is a disgrace for every human being if any child is working as a child slave in any part of the world," Satyarthi said. "I feel very proud to be an Indian that in India I was able to keep this fight on for the last 30 years or so. This is a great recognition and honour for all my fellow Indians."
In a recent editorial, Satyarthi said that data from non-government organisations indicated that child labourers could number 60 million in India, or 6 percent of the total population.
"Children are employed not just because of parental poverty, illiteracy, ignorance, failure of development and education programmes, but quite essentially due to the fact that employers benefit immensely from child labour as children come across as the cheapest option, sometimes working even for free," he wrote.
Children are employed illegally and companies use the financial gain to bribe officials, creating a vicious cycle, he argued.
Last month, based on a complaint filed by his organisation in a Delhi court, the Indian government was forced to put in place regulations to protect domestic workers who are often physically and sexually abused and exploited.
The prize, worth about $1.1 million, will be presented in Oslo on Dec. 10, the anniversary of the death of Swedish industrialist Alfred Nobel, who founded the award in his 1895 will.
The previous youngest winner was Australian-born British scientist Lawrence Bragg, who was 25 when he shared the Physics Prize with his father in 1915. (Additional reporting by Terje Solsvik, by Krista Mahr, Douglas Busvine, John Chalmers and Nita Bhalla in NEW DELHI and by Maria Golovnina and Mehreen Zahra-Malik in ISLAMABAD; Editing by Jeremy Laurence)
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