By Mohamed Sudam and Mohammed Ghobari

SANAA (Reuters) - Embattled Yemeni President Ali Abdullah Saleh told a huge rally of supporters on Friday that he would sacrifice everything for his country, suggesting he has no plans to step down yet.

Weeks of protests across Yemen have brought Saleh's 32-year rule to the verge of collapse but the United States and neighboring oil giant Saudi Arabia, an important financial backer, are worried about who might succeed him in a country where al Qaeda militants flourish.

Tens of thousands, both for and against Saleh, took to the streets of the capital Sanaa, as negotiators struggle to revive talks to decide his fate.

"I swear to you I will sacrifice blood and soul and everything precious for the sake of this great people," he told supporters shouting "the people want Ali Abdullah Saleh."

Saleh has lost support from tribal, military and political backers. Protests on Friday reached the thousands in provincial capitals from Taiz, 200 km (125 miles) south of Sanaa, to the southern port city of Aden, once capital of an independent south before Saleh united it with the north.

"Saleh is going down with the ship," said Theodore Karasik, security analyst at the Dubai-based INEGMA group. "The only way he'll let himself get dislodged is if he loses even more supporters from his inner circle.

"It seems like he's not ready to go. He's making statements saying he's going to do what's best for Yemen but really this is Saleh trying to do what's best for Saleh."

Helicopters buzzed over protests in Sanaa.

"Out traitor, the Yemeni people are in revolt. We, the army and the police are united under oppression," the crowds of anti-Saleh protesters shouted outside Sanaa University.

One cleric said during morning prayers at the rally: "I say to you, Saleh, while you sit terrified in your palace, that the people are on to your tricks... You (protesters) represent the oppressed, the poor and the imprisoned."

Tensions were high as equally large crowds came out in a show of support for Saleh in Sabyeen Square. That protest ended quietly as anti-Saleh protesters continued their sit-in near the university. Hundreds of security forces deployed at checkpoints across the city as tanks rolled through the streets.

Anti-Saleh protesters named the day a "Friday of enough" while loyalists branded it a "Friday of brotherhood."

"We send a message from the Yemeni majority to them (the opposition) and the whole world ... of our support for the nation and for our leader," former prime minister Ali Mohammed Megawar said at the pro-Saleh rally.

TALKS STALLED

Some Sanaa residents said they were paid to join protests. Government officials denied the ruling party had given any money to demonstrators, calling it an attempt by the opposition to diminish the significance of the large crowds they had drawn.

Saleh is looking to stay on as president while new parliamentary and presidential elections are organized by the end of the year, an opposition source told Reuters on Tuesday.

Talks over his exit have stalled and Saudi authorities have deflected Yemeni government efforts to involve them in mediation.

Protesters camped outside Sanaa University since early February insist that Saleh, who has said he will not run for re-election when his term ends in 2013, should step down now.

Rallies ended peacefully on Friday, but they could spiral into violence in the turbulent Arabian Peninsula state. Over half the 23 million population own a gun. Some 82 people have been killed so far, including 52 shot by snipers on March 18.

Rows can often turn to bloodshed, from tribal clashes over dwindling water resources to army skirmishes with separatist militants in the south.

On Friday, armed tribesmen kidnapped two soldiers and wounded another in the southern town of Lawdar. Residents said the tribesmen took the hostages to win concessions from the government after the army killed 5 fellow tribesmen and claimed they were from al Qaeda -- charges the tribe said were false.

Washington has long regarded Saleh as a bulwark of stability who can keep al Qaeda from extending its foothold in Yemen, a country which many see as close to disintegration.

Saleh has talked of civil war if he steps down without ensuring power passes to "safe hands" and has warned against a coup after senior generals turned against him in the past week.

Opposition parties say they can handle the militant issue better than Saleh, who they say has made deals with militants in the past to avoid provoking Yemen's Islamists.

(Additional reporting by Mohammed Mukhashaf in Aden, Writing by Erika Solomon and Nick Macfie; Editing by Janet Lawrence)