(adds new quotes, details) By Margarita Antidze and Hasmik Mkrtchyan YEREVAN, Feb 20 (Reuters) - Thousands protested in Armenia's capital on Wednesday against a presidential election they said was rigged in favour of Prime Minister Serzh Sarksyan, but Western observers called it broadly fair. Sarksyan has promised to pursue the policies of outgoing President Robert Kocharyan, his close ally. The new leader's biggest challenges will be a simmering territorial conflict with neighbouring Azerbaijan and frozen ties with Turkey. Sarksyan took 52.86 percent of the votes, the Central Election Committee said, giving him enough to win outright in the first round. Nearest rival Levon Ter-Petrosyan, Armenia's first president after independence from the Soviet Union, had 21.5 percent. Armenia is squeezed between Turkey and Azerbaijan in a region that is emerging as an important transit route for oil exports from the Caspian Sea to world markets, though Armenia has no pipelines of its own. "Yesterday's presidential election in Armenia was conducted mostly in line with the country's international commitments," observers from the Organisation for Security and Cooperation in Europe (OSCE) said in a statement. "Further improvements are necessary to address remaining challenges," it added. Earlier, Kocharyan congratulated 53-year-old Sarksyan on his victory in what he called free and fair elections. Ter-Petrosyan's supporters refused to recognise the result and said they would protest until Sarksyan's victory was overturned. They said Tuesday's vote was marred by ballot-stuffing and intimidation of the opposition. MORE PROTESTS Between 15,000 and 20,000 protesters gathered at a rally in central Yerevan, chanting "Levon! Levon!" and "Serzh: leave!" They marched to the Central Election Commission building. Police kept their distance from the protesters. "We will not take even a single step back, we can't give up," Ter-Petrosyan told the crowd. "We will continue our fight and protect our vote. I'm confident we'll reach our goal," he said, calling for the protesters to gather again on Thursday. Previous elections in Armenia have been followed by days of opposition protests alleging ballot fraud. A new round of protests will be a test for stability in a country which, in the 1990s, was rocked by political convulsions. Analysts say the unresolved conflict with neighbouring Azerbaijan over the separatist territory of Nagorno-Karabakh could flare again into violence, possibly threatening a BP-led oil pipeline that runs next to the conflict zone. The first country in the world to adopt Christianity as the state religion, Armenia also has fraught relations with Turkey, in part because Ankara refuses to recognise as genocide the killings of Armenians in Ottoman Turkey during World War One. Kocharyan is barred by the constitution from serving a third consecutive term. He is expected to remain influential but has refused to disclose what role he wants until his replacement is inaugurated. He and Sarksyan, both natives of Nagorno-Karabakh and veterans of its 1990s separatist war there, are credited with overseeing a period of double-digit economic growth after economic meltdown under Ter-Petrosyan. (Writing by Christian Lowe, editing by Elizabeth Piper)
People attend an opposition rally in Yerevan February 20, 2008. Thousands of protesters gathered in Armenia's capital on Wednesday claiming a presidential election was rigged to hand victory to Prime Minister ...
