* Batelco to take back staff fired after protests
* Demonstrators face off against riot police in capital (Adds protests in capital)
By Matt Smith
DUBAI, Jan 12 Bahrain's main telecommunications firm said on Thursday it would re-employ workers sacked after strikes connected to pro-democracy protests, the second company to do so in as many days, as fresh clashes erupted between police and demonstrators.
More than 2,000 mainly Shi'ite workers were sacked from state-controlled companies last year for taking part in strikes and protests against perceived discrimination and the dominance of the ruling Sunni Muslim al-Khalifa family.
Bahrain Telecommunications Co (Batelco) will take back axed workers "who agree to abide by Bahrain's labour law and Batelco internal policies", Chairman Sheikh Hamad Bin Abdulla al-Khalifa said in a statement.
A Labour Ministry committee had put pressure on Batelco after a ministry review found that 102 of the 172 company staff who lost their jobs had been illegally dismissed.
Bahrain, base for the U.S. Fifth Fleet, has also been under international pressure to reinstate Shi'ite workers.
A commission of international lawyers set up by King Hamad bin Isa al-Khalifa to investigate the unrest said in November many Bahrainis had been unfairly dismissed. The government promised to implement its recommendations.
Bahrain's Formula One circuit, due to host a race in April after the 2011 edition was cancelled, reinstated staff on Wednesday.
Despite moves to ease tensions, unrest continues in the Gulf island state. Majority Shi'ite Muslims and police clash almost daily, especially in mainly Shi'ite villages outside the capital, Manama.
On Thursday, hundreds of protesters gathered in Manama, facing off against riot police who fired tear gas and percussion grenades to disperse them, residents and activists said.
"I saw one demonstrator get hit in the face and he was hurt pretty badly," a resident said.
"We were so peacefully protesting why (do) they attack?" activist Mariam al-Sarraj said in a Twitter message.
The Interior Ministry said riot police moved against the march because it was "illegal".
"A protest group engaged in an illegal procession in ... Manama. Police warned them and (they) disobeyed. Legal procedures were taken," the ministry said in a message on Twitter.
Authorities have rarely issued permits for protests marches. (Additional reporting by Firouz Sedarat; Editing by Sophie Hares)