* Mutineers stormed information ministry on Monday
* Demanded release of political prisoners
* One-party state shunned internationally
By Richard Lough
NAIROBI, Jan 22 (Reuters) - Dissident Eritrean soldiers who had seized the information ministry were gone on Tuesday and calm returned to the capital, Asmara, an Eritrean envoy and Western diplomat said.
The soldiers took over the ministry on Monday to demand the release of thousands of political prisoners, a sign of a deepening rift between some factions of the military and the secretive country's president, Isaias Afewerki.
Eritrea's envoy to South Africa said there had been a "small incident" at the ministry but that order had been restored.
"The situation in Asmara and elsewhere is no different from any other day," Salih Omar Abdu told Reuters. State television was back on air. Its main headline was heavy snow in Paris.
It was unclear how order had been restored in the one-party state, where dissent is typically dealt with harshly.
The Red Sea country has become increasingly isolated under the two-decade rule of 66-year-old former guerrilla Isaias, who led Eritrea to independence in 1993 after a 30-year war with the government in Ethiopia.
Eritrea has long been at odds with the West. The United Nations accused it last year of torture and summary executions.
Growing economic hardship for many Eritreans - despite an influx of investment from gold miners - is eating away at Isaias' support base, regional diplomats and academics say.
That includes within the army, which has more soldiers per person than any country except North Korea, they say.
Internal fighting over power was an increasing problem for Isaias, said one U.S.-based academic who declined to give his name because he still has family in Eritrea.
"He has his back up against a wall," the academic said.
In 2001, a group of 15 senior officials, including ministers, wrote an open letter to Isaias demanding political reform. A number remain jailed without trial, rights groups say.
After that incident, Isaias had turned to the military, the academic said, but the increasingly powerful forces then started to make demands that went beyond security.
The mutineers this week, about 200 soldiers backed by tanks, had not made public demands beyond the release of political prisoners - estimated by the United Nations to number between 5,000 and 10,000 in the country of about 6 million people.
One U.S.-based Eritrean opposition website said the mutiny leader was Saleh Osman, a prominent military figure in the 1998-2000 border war with Ethiopia. Awate.com said he appeared to be "trying to jolt back negotiations for democratisation."
He was not contactable and it was not possible to verify independently. Eritrea restricts the access of foreign journalists and has one of the world's worst press-freedom records.
An exiled member of the opposition Eritrean National Council for Democratic Change said the uprising had followed efforts to defuse tensions between two army factions, one loyalist and the other known to voice criticism of Isaias, albeit internally.
Yemane Ghebremeskel, director of the president's office, said on Twitter: "All is calm today as it was indeed yesterday."
Eritrea occupies a strategic strip of mountainous land overlooking the entrance to the Gulf of Aden, one of the world's busiest shipping lanes.
Shares in gold companies with mines or projects fell sharply on Monday. Toronto-listed Nevsun Resources Ltd was down 9 percent. Those in the small explorer Sunridge Gold Corp were at one point in the session down 26 percent.
"These events have had no effect on Sunridge's ongoing engineering studies and drilling operations in the country," the Vancouver-listed company said in a statement.