Jan. 14 (Bloomberg) -- Latvian police detained 126 people after a peaceful protest by about 10,000 people calling for a referendum and elections turned into a riot, said Sigita Pildava, a police spokeswoman.

Police used pepper spray and batons to disperse protesters who had gathered in Riga’s old city, chanting “dissolve parliament,” and some crowd members broke windows in the Finance Ministry and a liquor store. A police car was set on fire, windows in the parliament were shattered and 28 people were injured, the Leta newswire reported.

The protest, organized by opposition political parties, trade unions and non-governmental organizations, called on the president to hold a referendum leading to new parliamentary elections less than a month after the country secured financial aid to bolster its economy.

Latvia received a 7.5 billion-euro ($9.9 billion) international aid package in December from a group led by the International Monetary Fund, the European Union and the Nordic countries. The Latvian economy contracted 4.6 percent in the third quarter from the same period a year earlier and the government took over the country’s second-biggest bank.

“We ask the Latvian president for new elections and to dissolve the Saeima,” said Artis Pabriks, a member of an opposition party, the Society for Different Politics, in a speech at the rally. “We want to see more-honorable and more-competent politics,” said Pabriks, who’s also a former foreign minister.

Similar protests in 2007 led to the resignation of the prime minister.

Latvia’s four-party coalition government has 52 votes in the 100-seat legislature.

To contact the reporters on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net; Ott Ummelas in Tallinn at oummelas@bloomberg.net

Last Updated: January 13, 2009 17:58 EST