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UPDATE 3-Fiat workers, police clash, dispute hits output

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MILAN, April 26 (Reuters) - Police and striking Fiat workers clashed at a car plant in southern Italy on Monday, injuring nine people as a labour dispute halted virtually all of the group's vehicle production in the country.

Seven strikers were hurt when police tried to clear a picket line at the Melfi plant with a truncheon charge, union representatives said.

Two police officials were injured by stones thrown by the protestors as one bus managed to break through the line.

Workers from one union at Melfi are demanding better pay and shift patterns. Their strike has hit Fiat -- shutting down 95 percent of car production, according to an industrial source -- just as it tries to tackle a deep sales crisis.

The blockade at Melfi has prevented parts from getting to other plants in Italy where most of Fiat's cars are made.

The seven injured demonstrators were taken to hospital with one in serious condition, union representative Lello Raffo told Reuters by telephone.

He said more than 1,000 protestors were gathered outside the plant while a police official said there were "certainly more than 100" and authorities were sending reinforcements in a bid to allow employees who wanted to work to enter the plant.

"There is not a trace of a worker inside, everything is closed. There is no one there apart from a couple of managers who cannot restart production," Raffo said.

Three other unions representing workers at Melfi struck a preliminary agreement with Fiat on Friday.

An Alfa Romeo plant in Pomigliano, near Naples, became the last Fiat plant in Italy to be halted by the dispute and a car plant in nearby Cassino was due to close on Monday afternoon. The Cassino factory had only restarted work hours earlier after two weeks of temporary layoffs, called as part of Fiat's struggle to pull itself from its worst ever financial crisis.

"The union clash is worrying because it is a challenge during a difficult phase for the company," said Bruno Tabacci, head of an industry commission in parliament.

"The baby must not be thrown out with the bath water. Both sides must realise what is at stake," he told reporters.

95 PCT OF OUTPUT HALTED

An industry source said the latest freeze meant more than 95 percent of Fiat's car output was closed with only some production continuing at Turin's Mirafiori plant.

"But sooner or later even that could close if parts from Melfi do not arrive," the industry source said.

Fiat on Friday estimated it lost production of 12,000 vehicles due to the dispute which came just as the group tried to tackle falling sales and losses at its core car division.

Fiat shares were down 1.8 percent at 6.05 euros at 1308 GMT when the DJ Stoxx index of European auto stocks was down 0.2 percent.

The FIOM-CGIL metalworkers union, which is involved in the dispute with Fiat, called on Monday for a four-hour nationwide strike on Wednesday.