* Tuesday marks 70th anniversary of People's Republic of China
* Protests planned across Hong Kong; malls, metro stations closed
* Hong Kong police warn of "very serious violent attack"
* Acting leader promises more dialogue to ease tensions (Adds protester comment, details of arrests made on Monday)
By Anne Marie Roantree and Farah Master
HONG KONG, Oct 1 (Reuters) - Hong Kong was in a state of unprecedented lockdown on Tuesday, with barricades in the city centre, shuttered stores and a heavy police presence, as authorities scrambled to ensure protests do not overshadow China's National Day celebrations in Beijing.
The former British colony has been racked by nearly four months of street clashes and demonstrations, posing the gravest popular challenge to Chinese President Xi Jinping since he came to power.
Protesters have vowed to seize on the 70th anniversary of the founding of the People's Republic of China on Tuesday to propel their calls for greater democracy onto the international stage, hijacking an occasion Beijing sees as an opportunity to showcase China's economic and military progress.
Authorities have denied permission for a protest march, but demonstrations are expected across the city regardless.
"I’d rather die than have no freedom,” said a college student who identified himself as just Green, speaking outside the Che Kung Temple in the New Territories region where a protest is expected.
Police said on Monday they expected a "very serious violent attack" in the city but gave no details.
Police said they arrested five people, aged between 17 and 25, in the central district of Wan Chai on Monday night after finding them with walkie-talkies, lighters and material for petrol bombs, including 18 litres (4.75 gallons) of fuel and empty bottles.
BEHIND CLOSED DOORS
Hundreds of officials and members of the pro-establishment elite began the day with a flag-raising ceremony and National Day reception at the Convention and Exhibition Centre, held early and moved behind closed doors. Roads to the centre were closed and tightly policed.
Hong Kong has benefited from China's support under the "one country, two systems" policy, Acting Chief Executive Matthew Cheung told the assembly, referring to guarantees of political freedoms after the city's handover from British to Chinese rule in 1997.
However, he said the "escalating violence of some radical protesters, including unlawful assemblies and blockage of roads, petrol bomb hurling, arson and attacks on other citizens, has not only disrupted social order but also posed a severe challenge to the rule of law, affecting the safety and normal lives of citizens".
The protests had "further hit the local economy, which is already facing downward pressure", he added.
The protests have taken a heavy toll on shopping malls that house some of the world's best-known luxury brands, with many closing early in recent weeks amid escalating violence.
The IFC mall, close to the city centre, was closed on Tuesday. One of Hong Kong's largest upscale shopping centres, IFC houses an Apple Inc store, jewellers Tiffany & Co and Chow Sang Sang, cosmetics maker L'Occitane and Gucci, which is owned by French group Kering .
The closure of IFC and several other malls means retailers will miss out on what would normally be a busy shopping week, when mainland tour groups traditionally flood in for the annual Golden Week holiday.
Latest data showed visitor arrivals plunged 39% in August from a year earlier, with the number of mainland tourists to Hong Kong dropping 42.3% over the period.
Cheung called a first "open dialogue" last week with citizens an important step and said more would follow.
A group of protesters outside the venue shouted "No national day celebrations, only national day mourning", and called for those arrested during recent clashes to be released. Police fired pepper spray during a scuffle outside a nearby train station.
Rail operator MTR Corp closed some flash-point metro stations.
The government of embattled leader Carrie Lam has already cancelled an annual Oct. 1 fireworks display over the city's Victoria Harbour, citing public safety.
Lam, who was trapped in a stadium for hours last week after attending the "open dialogue", left for Beijing on Monday to celebrate China's birthday on the mainland. She will return on Tuesday.
In contrast to events in Hong Kong, Beijing's carefully choreographed anniversary festivities included troops marching through part of Tiananmen Square with new missiles and floats celebrating the country's technological prowess.
The Communist Party leadership is determined to project an image of national strength and unity in the face of challenges including Hong Kong's unrest, slowing economic growth and a trade war with the United States.
"On our journey forward, we must uphold the principles of peaceful reunification and one country, two systems; maintain lasting prosperity and stability in Hong Kong and Macau ... and continue to strive for the motherland's complete reunification," Xi said in his nationally televised speech in Beijing.
Hong Kong protesters are angry about what they see as creeping Chinese interference in the Asian financial centre.
China dismisses the accusation and has accused foreign governments, including the United States and Britain, of fanning anti-China sentiment.
Last month, Beijing moved thousands of troops across the border into the city. The Xinhua state news agency described the movement as routine rotation.
Asian and Western envoys in Hong Kong, however, have said the absence of any evidence that troops had been withdrawn suggested it was a reinforcement, with the largest-ever regular army force now stationed in the city. (Reporting by Anne Marie Roantree and Farah Master Additional reporting by Jessie Pang and Sharon Tam Writing by Clara Ferreira Marques and Bill Rigby Editing by Lincoln Feast and Robert Birsel)