* Divisions spurred by political deadlock
* President Conde appeals for calm
* Guinea is world's top bauxite exporter
* Successful May vote could unlock aid (Recasts with president's national address)
By Saliou Samb
CONAKRY, March 1 (Reuters) - Guinean President Alpha Conde appealed for calm on Friday after rival ethnic gangs fought with knives and truncheons in the capital in a third day of violence over an upcoming election in the volatile West African nation.
Security forces in full anti-riot gear took to the streets of the crumbling seaside capital Conakry to try to stem violence in which at least 65 people were injured, according to a statement from the presidency.
"All sides must avoid provocation, personal vengeance and taking justice into their own hands," Conde said in a televised address to the nation.
"I ask religious leaders, security forces, elected officials and political leaders to call for calm."
The unrest began with an opposition protest on Wednesday in which some 130 people were injured.
A long-delayed legislative vote, tentatively set for May, is meant to complete a transition to civilian rule after a 2008 military coup, and could open the door to hundreds of millions of dollars in European aid.
But preparations for the poll have been hampered by opposition claims the government is seeking to rig the outcome in advance, leading to a political impasse and sparking sporadic street protests that often turn violent.
Residents of Conakry fled in panic as the gangs from rival ethnic groups roamed the streets. Shops and business were looted in many parts of the city.
"It has become very bad. People set fire to a car right in front of me. I've seen four people injured in the fighting," said Souleymane Bah, a resident of Bambeto, one of several areas where clashes were reported.
Politics in Guinea, the world's top supplier of bauxite, the raw material in aluminium, are mainly drawn along ethnic lines. The opposition coalition is broadly supported by members of the Peul ethnicity - the country's biggest ethnic group - and the government by the Malinke.
The fighting on Friday follows two days of anti-government protests that have sharpened those divisions. One civilian was killed in those protests and scores of protesters and police were injured.
The United States Embassy in Guinea issued a statement late on Thursday expressing concern about the violence and calling for restraint. "The United States continues to urge the Republic of Guinea to work with all parties to ensure that peaceful and transparent elections take place," it said.
Conde's government said on Friday it called on citizens to remain calm, and that it would hold talks with representatives of the country's political parties next week.
Conde narrowly won a 2010 presidential election - billed as the former French colony's first free poll since 1958 independence - promising to unite Guinea in the same way Nelson Mandela did after apartheid in South Africa. But many of his compatriots say he has failed.
Opposition leader and former premier Sidya Toure said opposition supporters were defending themselves.
"The situation has clearly degenerated into inter-ethnic violence between the Peuls and Malinkes. We've already called for calm, but what can you tell someone who is being attacked with a club?" he said.
Conde has promised prosperity for the former French colony's 10 million people.
Guinea's economy produces only about $1.50 per person per day despite a wealth of natural resources, including the world's largest untapped iron ore deposit. (Writing by Richard Valdmanis; Editing by Jason Webb)