* “Ecuador will not kneel,” says president

* Regional bodies meet over Assange saga

QUITO, Aug 18 (Reuters) - Ecuadorean President Rafael Correa on Saturday cast the Andean country’s tensions with Britain over asylum for WikiLeaks’ founder Julian Assange as a menace to Latin America, warning the UK that it should think twice before trampling on the region’s sovereignty.

Incensed by London’s threat to break into the Ecuadorean embassy where the former hacker is taking refuge, Correa’s government has accused Britain of “colonial” bullying and has formally granted the Australian asylum.

Britain says it will not allow the anti-secrecy campaigner from Australia to travel to South America because it is obliged to extradite him to Sweden, where he is wanted for questioning over rape and sexual assault allegations.

“They’re out of touch. Who do they think they’re dealing with? Can’t they see that this is a dignified and sovereign government which will not kneel down before anyone?” Correa said in his weekly address on Saturday.

“What a mentality, eh? They have not realized that Latin America is free and sovereign and that we’ll not put up with meddling, colonialism of any kind, at least in this country, small, but with a big heart.”

Correa spoke as Ecuador was hosting a weekend gathering of foreign ministers from the ALBA group of leftist-led Latin American nations, and from the Union of South American Nations (UNASUR).

ALBA, which includes the governments of Hugo Chavez in Venezuela and Raul Castro in Cuba, issued a strong statement in Caracas this week.

“We warn the United Kingdom ... about the grave consequences that carrying out their threats will have in relations with our countries,” it said.

“INVIOLABILITY OF EMBASSIES”

Support for Ecuador appears to be growing in the region.

“Britain ... is wrong. The threat is not only an aggression to Ecuador, it’s against Bolivia, it’s against South America, against the whole of Latin America,” Bolivian President Evo Morales said on Friday.

Ecuadorean state media said other nations including Colombia and Argentina were backing Correa’s position.

On Friday representatives of the hemispheric Organization of American States (OAS) called for a foreign ministers’ meeting next week over the Assange affair.

Canada and the United States voted against holding the meeting.

“The central issue is not the right of asylum, it is the inviolability of embassies,” OAS Secretary General Jose Miguel Insulza said after the vote.

Ecuador, an oil-producing nation of 14.5 million people that seldom finds itself in the global spotlight, is furious Britain said it could make use of an obscure measure to break into its embassy where Assange has been for more than two months.

The Ecuadorean government shares Assange’s fears that he ultimately could be extradited to the United States, which is angry that his WikiLeaks website has leaked hundreds of thousands of secret U.S. diplomatic and military cables.

The leftist Correa, who has high popularity levels and is expected to run for re-election in February 2013, had developed some rapport with Assange during an online interview the WikiLeaks founder did with him this year.

Correa’s stance has been largely cheered by Ecuadoreans, and there have been scattered protests at the British embassy.

“The whole world should back Ecuador for giving Assange asylum and because this country is the first one to promote freedom of expression,” said Mary Valenzuela, a 39-year-old restaurant owner.

After WikiLeaks released its deluge of diplomatic cables that laid bare Washington’s power-brokering across the globe, Assange became revered as a freedom-of-speech champion in many parts of Latin America, where there is strong tradition of criticizing the United States for meddling.

Leftist nations, and others, have been increasingly turning to new partners like China and Russia in recent years.

However, Europe and the United States are still important trade partners with the region, so Ecuador could suffer should the conflict escalate along commercial lines.

Business leaders and analysts told Reuters this week that long-time U.S. trade benefits for the Andean country are at risk due to the Assange saga.