TEGUCIGALPA– Leftist Latin American leaders rallied around ousted Honduran President Manuel Zelaya on Monday and tried to thrash out a response to an army coup that sparked protests in the impoverished nation and drew worldwide condemnation.

Pro-Zelaya demonstrators defied an overnight curfew and held a vigil by the presidential palace in Tegucigalpa, while Venezuela's firebrand President Hugo Chavez led talks with Zelaya and other allies in neighboring Nicaragua.

The coup is the biggest political crisis to hit Central America in years and will test U.S. President Barack Obama as he tries to mend Washington's battered image in Latin America.

The Obama administration called for Zelaya's return to office as legitimate president of Honduras, placing itself in the same camp as a group of leftist governments that are at ideological loggerheads with the United States.

The Organization of American States demanded Zelaya's immediate return, saying no other government would be recognized.

Tension mounted this week when Zelaya, a Chavez ally, angered the Honduran Congress, Supreme Court and army by pushing for a public vote to gauge support for changing the constitution to let presidents seek re-election beyond a single four-year term.

Before he could hold the poll on Sunday, the Honduran military seized Zelaya in his pajamas and flew him to Costa Rica in Central America's first successful army coup since the Cold War.

We cannot allow a return to the past. We will not permit it, thundered Chavez, a champion of Latin American socialism who survived an attempted army coup in 2002 and who has put his troops on alert in case Honduras moved against his embassy.

Flanked by Zelaya, Ecuadorean President Rafael Correa and Nicaragua's Daniel Ortega, Chavez denied that he was launching an invasion. We are here to support, respecting the sovereignty of Honduras, he said in Managua.

Bolivia's Evo Morales and OAS Secretary General Jose Miguel Insulza were due to join the group in Managua later on Monday and Washington said it was following the crisis closely.

Honduras was a U.S. ally in the 1980s when Washington helped Central American governments fight Marxist rebels and the United States still keeps some 600 troops at a Honduran base used for humanitarian and disaster relief operations.

Pulled to the left since Zelaya took power in 2006, Honduras was left isolated as the United States, the European Union and a string of other governments backed Zelaya.

PROTESTS SPARK PANIC-BUYING

In Honduras, a curfew was imposed for Sunday and Monday nights by Roberto Micheletti, who Congress named as interim president within hours of the coup. Micheletti said no foreign leader had the right to threaten Honduras.

Many people in Tegucigalpa cowered at home, scared there would be violence. Shops saw panic-buying and many people drew out cash or shuttered businesses.

A small group of pro-Zelaya protesters had vowed to spend the night in front of the presidential palace, however.

On Sunday shots were fired, apparently into the air, near barricades of chain link fences and downed billboards erected by the protesters to block off the presidential palace. Some demonstrators were masked and wielding sticks.

Troops in full fatigues with automatic weapons lined the inside of the fenced-off presidential palace. Some covered their faces with riot gear shields as protesters taunted them, and a tank sat nearby, its cannon facing the crowd.

Honduras, an impoverished coffee, textile and banana exporter with a population of 7 million, had been politically stable since the end of military rule in the early 1980s.

But Zelaya's close alliance with Chavez, and his efforts to lift presidential term limits, upset the army and the traditionally conservative rich elite.

Tensions peaked this week when Zelaya tried to fire the chief of the armed forces and the Supreme Court overruled him. The same court gave the army the order to oust the president.

Hondurans are divided over the crisis. Pro-Zelaya protesters burned a news stand selling newspapers that backed the coup and said pro-Zelaya television and radio channels had been cut. But recent polls show overall support for Zelaya has dropped to around 30 percent in recent months.

Why did he call for constitutional changes? Because he wants to follow in the footsteps of Chavez, he wants to stay in power. And this hurts the country, it discourages investment, said Walter Aguilera, who supported the coup.

(Additional reporting by Gustavo Palencia in Tegucigalpa and Sean Mattson in Managua; Writing by Catherine Bremer)

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