Updated

By Alan Baldwin

MANAMA (Reuters) - Formula One cars take to the track in Bahrain on Friday with the government hoping a successful Grand Prix will draw a line under more than a year of Arab Spring protests and activists promising to mark the motor race with "days of rage".

On the eve of the first practice session, police fired tear gas and stun grenades to disperse demonstrators on Thursday in the kind of clashes that have built up in the week leading to Sunday's round of the World Championship.

Bahrain has been in turmoil since a democracy movement erupted last year following uprisings in Egypt and Tunisia. Protests were initially crushed with the loss of dozens of lives, but youths still clash daily with riot police in Shi'ite Muslim districts and thousands take part in opposition rallies.

Two members of the British-based Force India team asked to go home after seeing burning of petrol bombs in what the government described as an isolated incident.

"A number of rioters and vandals had been arrested for taking part in illegal rallies and gatherings, blocking roads and endangering people's lives by attacking them with petrol bombs, iron rods and stones," the Information Affairs Authority said in a statement, citing Major-General Tariq Al Hassan.

However, activists accused the kingdom's rulers of using the motor race to improve their international image.

"Formula One in Bahrain has been taken as PR for the ruling elite, the repressive dictators who are ruling the country," activist Nabeel Rajab told a news conference.

Bahrain's ruling al-Khalifa family, a Sunni Muslim dynasty ruling a majority Shi'ite population and caught between powerful neighbors Saudi Arabia and Iran, hopes the race will offer an opportunity to tell the world that life is returning to normal.

However, Western companies are opting not to entertain clients and partners following calls for sponsors to boycott the event. Shell, which sponsors the Ferrari team, will not be hosting any guests at the event, a source familiar with the company's plans said.

"A LOT OF HYPE"

Unrest forced the cancellation of last year's Grand Prix and the 2012 race has been in doubt as Bahrain's human rights record has come under fire from abroad.

Red Bull's double world champion Sebastian Vettel played down the trouble. "I haven't seen anyone throwing bombs. I don't think it's that bad. I think it's a lot of hype."

Several hundred demonstrators tried to stage protests in the capital, Manama, on Thursday. Police broke up the protesters who are vowing to intensify their actions over the three-day race meeting.

However, it was not clear if Wefaq, the leading Shi'ite opposition party, would organize large rallies as this could open it to government accusations of acting against the nation's interest. Wefaq has said it is not against staging the race.

Manama is blanketed with security, with police stationed on bridges linking the capital to the rest of the country and the Bahrain International Circuit in Sakhir.

Though life in Manama's main commercial, residential and tourist districts appears detached from the nightly battles, tear gas often floats over from conflict zones pocketed around the capital.

The death toll from the year of turmoil has risen to around 70, activists say, with many due to heavy use of tear gas. The government disputes the causes of death and accuses protesters in Shi'ite villages of being saboteurs out to harm the police.

Activists say the government has tightened its security grip over the past week in an effort to keep Shi'ites in their villages and stop them gathering on main highways when the international media glare is on the race.

Rights activists and medics say around 95 protest organizers have been arrested in night raids in the past week and 54 people wounded in clashes. Police have declined to give figures on arrests and injuries.

The Bahrain government must also decide what to do about a jailed Shi'ite rights activist who has been on hunger strike for more than 70 days.

Abdulhadi al-Khawaja is one of 14 men in prison for leading the uprising last year. Releasing him would involve a loss of face for the government, but his death would create a martyr.

"He is a pain in the neck for them but they don't want him to die also, that's why they have taken him to their best hospital, in the royal wing," his wife Khadija al-Mousawi said in an interview, wiping away tears.

STALEMATE

Large sums of money are stake this weekend. Last year, Bahrain paid a "hosting fee" of $40 million despite cancelling the race. The Grand Prix drew 100,000 visitors to the nation of just 1.3 million and generated half a billion dollars in spending when it was last held two years ago.

A group of British lawmakers warned Formula One sponsors that they risk damaging their brands by supporting the Bahrain Grand Prix and said the race should have been called off.

"The scheduling of the Bahrain Grand Prix will provide a forum and indicate to the rest of the world that it is business as usual - when the reality could not be further from the truth," he wrote.

Bahrain's turmoil has a regional dimension. Sunni Saudi Arabia sent troops to back the government's crackdown last year, while media in Shi'ite Iran have taken up the cause of the cause of the opposition.

Bahrain is the base for the U.S. Navy's Fifth Fleet, among whose tasks is deterring Iran from making good on recent threats to disrupt Gulf oil tanker routes to the West.

Washington has only gently prodded Bahrain's rulers to improve their human rights record and push forward political reforms, and does not want to jeopardize ties with a ruling family it views as an ally in the region.

The opposition parties, led by Wefaq, want the elected parliament to have full powers to legislate and form cabinets, reducing the domination of the Al Khalifa family.

The government has increased parliament's powers of oversight but refused to budge on the bigger issues, amid what analysts see as a dispute among different wings of the ruling family over how to proceed.

(Writing by Andrew Hammond; Editing by Reed Stevenson and David Stamp)