SANAA (Reuters) - Two prominent members of Yemen's ruling party resigned on Saturday in protest against the killing of dozens of anti-government protesters, while troops enforced a state of emergency in the capital.

Defying the crackdown, the opposition vowed to keep up its "peaceful revolution" in the poor Arabian peninsula state, a neighbor of Saudi Arabia and a U.S. ally against al Qaeda.

Soldiers set up checkpoints to enforce a ban on carrying firearms in public, even checking for hidden guns inside the ornamental scabbards of traditional Yemeni jambiya daggers.

Nasr Taha Mustafa, head of the state news agency and a leading ruling party member, said he had resigned from his post and the party in protest over Friday's killings of up to 42 protesters by rooftop snipers in the capital.

The snipers opened fire on crowds that flocked to a sit-in at Sanaa University after Friday prayers. Protesters said they had caught at least seven snipers carrying government identity cards, but President Ali Abdullah Saleh denied this, blaming gunmen among the protesters for the violence.

"I find myself compelled to submit my resignation ... after the heinous massacre in Sanaa yesterday ... Nothing can justify the deaths of scores of youths whose only sin was to exercise the freedom guaranteed by Islam and the constitution to demand change," Mustafa said on his Facebook page.

Another party member, Mohamed Saleh Qara'a, told Reuters he had also quit because of the "completely unacceptable" violence. The tourism minister and the head of the party's foreign affairs committee resigned on Friday.

Inspired by mass protests that toppled the leaders of Tunisia and Egypt, demonstrators have been demanding for weeks that veteran president Saleh step down. More than 70 people have been killed.

Austrian energy firm OMV halted production at the Uqlah oilfield in Shabwa province and will withdraw its staff due to security concerns, a Yemeni oil source said on Saturday.

OMV said on Tuesday it would not be able to transport oil through a Yemeni export pipeline for a few days, after the pipeline was blown up by disgruntled tribesmen.

Friday's bloodshed prompted Saleh, struggling to preserve his 32-year rule, to declare a state of emergency for 30 days that restricts freedom of movement and the right to gather. It also grants police more leeway to make inspections and arrests.

Tanks were deployed for the first time since the unrest began. Yemen is the second country in the region to announce emergency rule this week, after Bahrain declared martial law on Tuesday.

Two out of every five Yemenis live on less than $2 per day. The U.S.-allied government faces separatists in the south, maintains a shaky truce with rebels in the north and is fighting an aggressive local al Qaeda wing.

Saleh has rejected demands to step down immediately but promised to leave office when his term expires in 2013. He has also offered a new constitution with a stronger parliament.

The opposition said there was no way it could negotiate with Saleh's government after Friday's killings.

"Sending tanks to the streets is a sign that the regime is in a state of panic. But Yemenis are determined to move forward with their peaceful revolution until the fall of the regime," said opposition spokesman Mohammed al-Sabri.

"Tanks don't scare us. They have killed dozens of us and hundreds were wounded. And we are not leaving until Ali Abdullah Saleh leaves," said Abdullah Saif, one of the protesters.

In the southern port city of Aden, police shot and wounded six protesters as they tried to disperse demonstrators holding a sit-in in a main street, residents said.

The United States and France condemned Friday's violence. U.S. President Barack Obama urged Sanaa to protect peaceful protesters and said those responsible must be held accountable.

(Additional reporting by Mohammed Ghobari in Sanaa and Mohammed Mukhashaf in Aden; writing by Reed Stevenson; editing by Mark Trevelyan)

Source: Reuters US Online Report World News