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* Police ban protest outside Cathay Pacific headquarters
* Carrier caught in crosswinds of pro-democracy protests
* Protests continue despite warnings from HK leader, Beijing
* 'MeToo' rally also being planned for later on Wednesday
HONG KONG, Aug 28 (Reuters) - Hong Kong carrier Cathay Pacific Airways warned against what it described as an illegal protest planned outside its offices on Wednesday and that it had zero tolerance for "violent activities" and any staff who took part.
Cathay has been caught in the crosswinds between authorities in Beijing and anti-government protesters who have staged sometimes violent demonstrations since June that have grown to pose the city's biggest challenge since it returned to Chinese rule in 1997.
The carrier said in a statement late on Tuesday police had banned a planned protest around its Cathay City headquarters on Lantau island, next to Hong Kong's international airport, on Wednesday evening, making it illegal.
"Cathay Pacific wishes to emphasize that it fully supports the upholding of the Basic Law and all the rights and freedoms afforded by it," the statement said.
The protests in the Asian financial hub have also posed the biggest challenge for Communist Party rulers in Beijing since President Xi Jinping took power in 2012. Authorities in Beijing have sent a clear warning that forceful intervention is possible to subdue the violence.
Unrest escalated in mid-June over a now-suspended extradition bill that would have allowed people to be sent to mainland China for trial in Communist Party-controlled courts.
It has since evolved into calls for greater democracy under the "one country, two systems" formula enshrined in the Basic Law under which Hong Kong has been administered since the return from British to Chinese rule.
Cathay became the biggest corporate casualty of the protests after China demanded it suspend staff involved in, or who support, the demonstrations.
Wednesday's planned rally, aimed at protesting against recent staff dismissals, has since been moved to the central financial district by the Hong Kong Confederation of Trade Unions, which cited safety concerns if it was held outside Cathay City.
Carrie Lam, Hong Kong's embattled leader, has not ruled out the possibility her administration could invoke emergency powers to quell the protests. She said in a news briefing on Tuesday that violence was becoming more serious but was confident the government could handle the crisis itself.
Imposing the Emergency Regulations Ordinance would give Lam wide-ranging powers - from changing laws, authorising arrests, detentions and deportations, to censoring the media - according to legislation on the government's website.
Senior Chinese diplomat Wang Yi told a Hong Kong business delegation in Beijing on Tuesday that more support should be given to the city's government to end violence and said the city was capable of overcoming its problems.
More protests are planned in districts across the special administrative region in the coming weeks, including a general strike on Monday.
Another protest is planned later on Wednesday, after the Cathay Pacific rally, against what demonstrators say is sexual violence by police.
It has been dubbed the "#MeToo" rally and participants are being encouraged to write "#ProtestToo" on their arms with red lipstick.
Police said in a statement on Tuesday they respected the dignity, privacy and rights of people under detention and that they were aware of online "rumours" that a person had been sexually harassed while in custody.
"We have looked into the records and I must emphasize that such rumours are totally false. Also, we have not received any formal reports or complaints," Police Public Relations Branch Chief Superintendent Tse Chun-chung said in the statement.
Hong Kong billionaire Michael Kadoorie, the chairman of power company CLP Holdings and Hong Kong and Shanghai Hotels Limited, urged a peaceful resolution to the crisis in a full-page newspaper advertisement published in the South China Morning Post newspaper on Wednesday.
Kadoorie quoted his late father in saying that Hong Kong was always going to develop as a neutral point of contact between two different ideologies and two different systems of government and said the city could not leave its young people in despair.
"It is the responsibility of all of us to rebuild trust in the community and create hope for the younger generation," Kadoorie said.
Western governments, including the United States and Britain, have also called for restraint and urged dialogue between all sides.
The Australian Council of Trade Unions called on Prime Minister Scott Morrison on Wednesday to put Australia's trade deal with Hong Kong on hold until concerns about human rights abuses of pro-democracy protesters were resolved. (Reporting by Twinnie Siu, Donny Kwok, Felix Tam, and Jessie Pang; Writing by Farah Master; Editing by Paul Tait)