Anger grows as Nigeria fuel strike enters 3rd day By Tim Cocks LAGOS (Reuters) - A bitter showdown between Nigeria's government and unions with popular backing enters its third day on Wednesday, with workers vowing to stay on strike unless a motor fuel subsidy is restored, and authorities threatening to withhold their pay. Two days of strikes and protests have strangled Africa's second biggest economy, besieged people in their homes and on occasion erupted into lethal violence. A mob killed five people in an attack on a mosque in southern Nigeria on Tuesday, taking advantage of the civil disorder to settle sectarian scores and highlighting the worsening fragility of Africa's biggest oil producer. Police shot dead two people and wounded at least two dozen during protests on Monday. Tens of thousands demonstrated in cities across the country of 160 million on Tuesday in protests that are gathering pace, especially in Lagos, Nigeria's largest city, and in the capital Abuja. Apart from a few independent market stalls that remain open, entire cities and all their shops, banks, restaurants and public offices have been shut down. This has not yet had an impact on oil production, industry officials say, though the offices of international companies such as Shell and Exxon Mobil are shut. "We call on Nigerians to continue the strikes, rallies and protests tomorrow, Wednesday January 11, 2012 and subsequent days until the Jonathan government listens to the voice of the Nigerian people," the main unions said in a joint statement. The Jonathan presidency must wake up to the reality that Nigerians ... have spoken out across the country against the fuel price hike and it will do well to listen. The administration of President Goodluck Jonathan is now facing two major security headaches -- opposition to the fuel price rise and low level sectarian strife started by Boko Haram, the increasingly violent group of Islamist insurgents. Suspected Boko Haram members opened fire on a bar in the northeastern town of Potiskum on Tuesday, killing eight people, four of them policemen, the local police commissioner said. Jonathan has been under fire for failing to quell the Boko Haram, whose insurgency is rooted in the largely Muslim north but which is increasingly targeting Christians from the south -- most recently in attacks on churches that have killed dozens and sparked reprisals against Muslims. But that pales against the anger Jonathan has unleashed by scrapping the fuel subsidy - which economists said would soon have bankrupted the country if it hadn't been removed. When the announcement was made on January 1, many citizens saw what they regard as their only welfare benefit disappear and the price of petrol more than doubled to 150 naira ($0.93) a liter. Jonathan has shown no sign of weakening in the face of protests similar to those that have derailed past attempts to scrap the fuel subsidy. The option of dialogue is still open. I think each side is exploring the need to talk," Labour Minister Chukwuemeka Wogu told journalists on Tuesday, but neither side wants to budge. Raising the stakes, the attorney general said late on Tuesday that striking public sector workers would not be paid, because the strike has been ruled unlawful by the courts. The government estimates it will save 1 trillion naira ($6 billion) this year by eliminating the subsidy. Finance Minister Ngozi Okonjo-Iweala said 90 billion naira a year of the money saved would be spent on roads and other infrastructure, 57 billion on the railways and 60 billion on poverty safety nets. Additional reporting by Camillus Eboh and Felix Onuah in Abuja; Writing by Tim Cocks Editing by Tim Pearce