By Paul de Bendern and Selcuk Gokoluk
ANKARA (Reuters) - Turkish authorities detained at least 21ultra-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 probe into Ergenekon, a shadowy,ultra-nationalist and hardline secularist group suspected ofplanning bombings and assassinations calculated to trigger anarmy takeover.
"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.
Ankara police said 24 people had been detained, but laterthe prosecutor's office told state news agency Anatolian that21 were in detention and three more were being sought.
Anatolian said among those detained were prominent retiredgenerals Hursit Tolon and Sener Eruygur, the former chief ofgendarmerie forces and head of a powerful secularistassociation.
The Milliyet daily said on its Web site a retired brigadiergeneral and a retired vice-admiral had also been detained.
"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.
Ankara Chamber of Commerce chairman Sinan Aygun and Ankararepresentative of Cumhuriyet newspaper were 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,only two involving armed force. The most recent was a 1997'soft coup', when the generals edged from power a government itconsidered islamist using a combination of public andbehind-the-scenes pressure.
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 a retired general, lawyersand politicians have been arrested over the past year forsuspected links to Ergenekon. The military, which hasrepeatedly criticised the government, 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.
"We have nothing to do with illegal activities," ADD deputychairman Ali Ercan told Reuters.
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)