By Paul de Bendern and Selcuk Gokoluk
ANKARA (Reuters) - Turkish authorities detained at least 24ultra-nationalists, including two prominent retired generals,on Tuesday in a widening police investigation into a suspectedcoup plot against the government.
Police swooped shortly before the Constitutional Courtbegan hearing a legal case in which the governing AK Party ischarged with trying to establish an Islamic state and could beclosed, a move that might lead to an early parliamentaryelection.
Turkish stocks fell six percent and the lira currencyalmost two percent on concerns of prolonged politicaluncertainty which political analysts say could damage Ankara'shopes of joining the European Union.
Prime Minister Tayyip Erdogan said the detentions werelinked to a long-running investigation into Ergenekon, ashadowy, ultra-nationalist and hardline secularist groupaccused of seeking a coup.
"It is not the AK Party which they cannot tolerate. Whatthey can't tolerate is democracy, the national will, thepeople's feelings and thoughts," Erdogan said.
State news agency Anatolian said at least 25 people,including two prominent retired generals and the Ankara head ofthe secularist daily Cumhuriyet, were among the detained. Mediasaid another former general was being sought by police.
"These are prominent people and their common point is theirloyalty to secularism. The (government) wants to turn societyinto an empire of fear," Mustafa Ozyurek, a senior lawmaker inthe main opposition party CHP, told broadcaster NTV.
Anatolian named the retired generals who were detained asHursit Tolon and Sener Eruygur, the former head of theparamilitary gendarmerie forces and head of a powerfulsecularist association. Ankara Chamber of Commerce chairmanSinan Aygun was also detained.
Turkey, while predominantly Muslim, has a secularconstitution, and the military considers itself the ultimateguardian of the republic founded by Mustafa Kemal Ataturk. Itremains at odds with the AK Party over the role of religion inpublic life, an issue which has polarised Turkey for decades.
Turkey has had four military coups in the last 50 years.
Political analysts say Ergenekon is part of the shadowy"deep state", code for hardline nationalists in Turkey'ssecurity forces and state bureaucracy who are ready to take thelaw into their own hands for the sake of their own agenda.
More than 40 people, including former army officers,lawyers and journalists have been arrested over the past yearfor suspected links to Ergenekon. The military, which hasrepeatedly criticised the government and considers itself theguardian of Turkey's secular system, has denied any links tothe group.
No formal charges have been brought against them butAnatolian news agency reported judicial sources as saying anindictment should be ready by the end of the week.
Half of those detained on Tuesday were members of thepowerful Kemalist Thought Association (ADD), a group promotingthe principles of modern Turkey's founder, Hurriyet daily said.ADD helped push millions of Turks onto the streets to protestagainst the election of former foreign minister Abdullah Gul aspresident last year, sparking an early parliamentary election.
The secularist establishment, including army generals andjudges, suspects the AK Party of harbouring a hidden Islamistagenda. The party, which embraces nationalists, market liberalsand centre-right politicians as well as religiousconservatives, denies the accusations.
Shortly after the detentions, Turkey's chief prosecutoroutlined his case in the Constitutional Court to close the AKParty, which was re-elected only last year.
The prosecutor also wants to ban 71 political figures,including Erdogan, from party politics for five years forseeking to turn officially secular, but predominantly Muslim,Turkey into an Islamic state.
The AK Party denies the charges and says they arepolitically motivated. A ruling could come as early as August.
Turkish courts have banned more than 20 parties for allegedIslamist or Kurdish separatist activities. A predecessor to theAK Party was banned in 2001.
If the AK Party is closed and Erdogan removed from power,analysts expect an early parliamentary election will follow.
Political analysts say the likelihood of the AK Party beingclosed down has increased since the Constitutional Court lastmonth overturned a government-led move to allow students towear the Islamic headscarf at university.
"Is this a coincidence that the (police) operation on ouroffices comes at the same time as the oral statement by thechief prosecutor?" asked Cumhuriyet columnist Cuneyt Arcayurek.
The court case reflects a power struggle between two rivalelites as much as a decades-old differences in opinion overwhether restrictions on practising Islam should be eased.
(Additional reporting by Daren Butler; writing by Paul deBendern; editing by Ralph Boulton)