ATHENS (Reuters) - Retail workers protested in Athens against a relaxation of rules restricting the number of Sundays a year when shops can open, a reform demanded by Greece's foreign lenders which aims to make its recession-hit economy more flexible.

After opposition from small retailers and the Orthodox Church, the government has backed away from allowing retailers to trade on any Sunday. Instead, the new rule lets them operate on seven Sundays a year, up from two now.

About 500 shop employees, who fear they will be forced into more weekend work, marched through the main shopping district on Sunday when the new rules came into force. They chanted "No more austerity" and held banners reading "Resist" and "Never on Sunday".

In a symbolic protest, some blocked for a few minutes the entrance of stores on Ermou, the main commercial street which was busy with shoppers looking for autumn bargains. Similar protests took place in other Greek cities.

Small retailers say that a liberalization would fail to boost sales and instead raise their operating costs.

Greece's influential Orthodox Church has said the Sunday holiday, which was first established in 1908, should be strictly reserved for religious observance and rest.

But the government says more Sunday shopping would boost retail sales in a country struggling to pull itself out of a six-year recession deepened by austerity measures and record unemployment.

The economy, which relies heavily on tourism, has shrunk by about a quarter since the crisis broke out in 2009.

"In a country which receives 18.5 million tourists (a year), which wants to become a weekend destination, it is unthinkable for shops to stay shut on Sundays," the Deputy Minister of Development Notis Mitarachi told reporters.

(Reporting by John Kolesidis and Phoebe Fronista; Writing by Renee Maltezou; editing by David Stamp)

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