By Richard Balmforth and Natalia Zinets
KIEV (Reuters) - Ukrainian President Viktor Yanukovich returned to work on Monday after four days of sick leave, issuing a warning about rising "radicalism" after more than two months of unrest on the streets but giving no word on a new prime minister.
Yanukovich, caught in a tug of war between Russia and the West, is seeking a way out of a sometimes violent confrontation with protesters who have occupied city streets and public buildings following his decision in November to spurn a trade deal with the EU and accept financial aid from Moscow.
As he returned to work, looking in fair health, a day before a new session of parliament, the political opposition took heart from fresh expressions of support from Western governments and pressed for more concessions to end protests.
However, the European Union, whose foreign policy chief is due in Kiev late on Tuesday, played down suggestions it was working with the United States on a large-scale aid package aimed at nursing the economy through a political transition.
The president's first urgent task, after an absence that some saw as a tactical gambit to gain time, will be to name a new prime minister to succeed Mykola Azarov, who stepped down on January 28 under pressure from the protest movement.
Russia has suspended its financial support until it sees how a new government will handle relations with Moscow.
But Yanukovich confined himself, in his first public appearance since Wednesday, to warning against the actions of thousands of protesters who have erected barricades around central Kiev and occupied public buildings there and in other cities, as well as militants who have clashed with police.
At least six people were killed in clashes last month.
"We must say no to extremism, radicalism, the fanning of enmity in society, which is the basis of the political fight against the authorities," he said in remarks on video.
On the frontline barricades close to the Kiev parliament building, where riot police and club-wielding, steel-helmeted militants face off across 20 meters of no man's land, his words carry no weight. "We're staying here until Yanukovich is gone," said a 28-year-old masked opposition protester named Dima.
EU, RUSSIAN MONEY
The speaker of parliament, a Yanukovich ally, said the president was still planning to discuss the choice of premier with the opposition and may propose someone this week.
In other concessions, Yanukovich last week approved the repeal of recent anti-protest laws and offered a conditional amnesty to activists who have been detained in the unrest.
But opposition leaders want further concessions, including a broader amnesty for detainees and a return to an earlier constitution, which would curb presidential powers and give parliament greater control over the formation of governments.
EU diplomacy chief Catherine Ashton is to meet Yanukovich and opposition leaders on Wednesday. A report of her describing an EU-U.S. aid package for reforms lifted prices of Ukraine's dollar bonds [ID:nL5N0L82LU] even as political tensions saw the hryvnia currency continue to weaken.
However, European Commission President Jose Manuel Barroso played down talk of aid on Monday, saying the EU was discussing with allies whether to help Kiev. But in reference to rivalries with Russia, he said: "We are not going to a bidding competition to say who pays more for the signature of Ukraine."
The EU has very limited funds to offer compared to the $15 billion pledge by Russian President Vladimir Putin in November and has previously made support conditional on IMF-prescribed market reforms that would be unpopular and which have found little favor with Yanukovich and his allies in big business.
Having lent Ukraine $3 billion of the package so far, Moscow suspended a further tranche of $2 billion, saying it first wants to see who Yanukovich appoints as prime minister.
In a worrying development for Ukrainians in the grip of an Arctic winter, energy firm Naftogas said it might not be able to pay Gazprom for Russian gas imports on which the former Soviet republic relies.
Easier terms for energy after years of "gas wars" with Kiev were part of Moscow's support package agreed two months ago.
Russia, which had threatened Ukraine with ruinous trade sanctions if it signed up to last year's EU pact, has been concerned to maintain its influence over the country of 45 million. It accused Western-backed opposition leaders on Monday of provoking unrest by calling for "volunteer militias".
"We expect the opposition in Ukraine to avoid threats and ultimatums and join in dialogue with the authorities in order to find a constitutional way out of the country's deep crisis," the Russian foreign ministry said in a statement.
With relations between the West and Putin's Kremlin already strained over a variety of issues, the fate of Ukraine, the biggest state lying between central Europe and Russia, has raised fears of broader instability across the continent if the standoff in Kiev should spiral out of control.
"All our partners both in the East and in the West understand the threat to their countries if the political crisis is not overcome and grows," Ukrainian Foreign Minister Leonid Kozhara said in comments to reporters. "The action of radical groups which are acting openly gives special concern."
Tensions between Ukraine's Russian-speaking east and Ukrainian-speaking west are evident in small groups on either side which draw on historical enmities for emotional appeal.
The anti-government camp in central Kiev is adorned with nationalist heroes who fought tsarist and Soviet control. On the other side, some present themselves as heirs to the Red Army, which drove Nazi occupiers from Ukraine in World War Two.
Mainstream leaders play down the ethnic divide and say they want good relations with both Russia and the West.
On the streets, each side accuses the other of provoking violence. Police on Monday said they had found pistols on two anti-government activists in Kiev - an accusation protest organizers described as defamatory propaganda.
Yanukovich's main opponents, whose leaders won assurances of support from U.S. and EU officials in Germany at the weekend, are pushing for an immediate change in the political system, as well as for a revival of the EU free trade deal.
Arseny Yatsenyuk, parliamentary leader of the biggest opposition party, Batkivshchyna (Fatherland), told a meeting on Monday of parliament's agenda-setting committee that his bloc was ready to vote on a constitutional bill as early as Tuesday.
Party allegiances in the single-chamber legislature have been fluid and it is unclear how far the opposition can rally a majority over Yanukovich's Party of the Regions and its allies.
The bill would restore the constitution to a version enacted in 2004 in Ukraine's post-Soviet "Orange Revolution".
Yatsenyuk, who last week turned down an offer from Yanukovich to become prime minister, said restoring the 2004 constitution would "cancel the dictatorial authority of the president" and give parliament the power to form governments.
(Additional reporting by Pavel Polityuk and Alastair Macdonald in Kiev and Adrian Croft in Brussels; Writing by Richard Balmforth and Alastair Macdonald; Editing by Giles Elgood)