By Nigel Stephenson

MOSCOW (Reuters) - Russia staged a huge May Day parade on Moscow's Red Square for the first time since the Soviet era on Thursday, with workers holding banners proclaiming support for President Vladimir Putin after the seizure of territory from neighboring Ukraine.

Thousands of trade unionists marched with Russian flags and flags of Putin's ruling United Russia party onto the giant square beneath the Kremlin walls, past the red granite mausoleum of Soviet state founder Vladimir Lenin.

Many banners displayed traditional slogans for the annual workers' holiday, like: "Peace, Labour, May". But others were more directly political, alluding to the crisis in neighboring former Soviet republic Ukraine, where Russian troops seized and annexed the Crimea peninsula in March, precipitating the biggest confrontation with the West since the Cold War.

"I am proud of my country," read one. "Putin is right," said another.

Unlike Kremlin leaders in Soviet times, Putin did not personally preside at the parade from atop the mausoleum. But he carried out another Soviet-era tradition by awarding "Hero of Labour" medals to five workers at a ceremony in the Kremlin. He revived the Stalin-era award a year ago.

Putin has described the breakup of the Soviet Union as a tragedy and overturned decades of post-Cold War diplomacy in March by declaring Russia's right to intervene in former Soviet countries to protect Russian speakers.

Laws have been changed to make it easier for Russia to annex territory from other former Soviet states and for inhabitants of other parts of the old Soviet Union to get Russian citizenship.

Since the annexation of Crimea, pro-Moscow gunmen have seized territory in eastern Ukraine and Putin has massed tens of thousands of troops on the frontier. He denies he is planning an invasion but proclaims the right to launch one if necessary to defend Russian speakers.

May Day, always an important date in the Soviet calendar and still a major holiday for Russians, has been marked by rallies in other parts of Moscow since the Soviet Union collapsed at the end of 1991, but until now parades were kept off Red Square.

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PATRIOTIC UPLIFT

Moscow mayor Sergei Sobyanin told Rossiya 24 TV from Red Square that more than 100,000 people had marched through it.

"This is not by chance, because there is a patriotic uplift and a good mood in the country," he said.

Russian television also showed footage of a May Day parade in Crimea's capital Simferopol, with Russian flags and banners reading "Crimea is Russia. Welcome home."

"We are sure that the current patriotic uplift in Crimea will spill over into the whole Russian Federation," Interfax news agency quoted Crimea's pro-Moscow leader Sergei Aksyonov as telling journalists.

Russia seized the peninsula last month after a pro-Russian Ukrainian president was toppled in February. The United States and European Union accuse Moscow of directing the uprising in south-eastern parts of Ukraine and have imposed sanctions on Russian individuals and companies.

The sanctions, while not hitting Russia's industry directly, have hurt the economy by scaring investors into pulling out capital. The International Monetary Fund cut its outlook for Russian 2014 economic growth this to just 0.2 percent on Wednesday and said Russia was already "experiencing recession".

But at home, the intervention in Ukraine has been enormously popular. One opinion poll on Wednesday showed 82 percent support for Putin, his highest rating since 2010.

"Western sanctions won't affect us. Crimea was historically part of Russia, and it's only right that we've become whole again," said Tatyana Ivanova, a worker at Moscow Housebuilding Factory No. 1 celebrating May Day with four colleagues.

But not all Muscovites were so impressed.

"Today isn't a particularly special holiday, it's just a nice spring day, and people are happy to have an opportunity to celebrate," said historian Kirill Strakhov, 31, speaking on another square near Moscow's Bolshoi Theatre.

"The authorities are trying to drum up support by encouraging patriotic feelings. They ignore the fact that there are many difficult economic and geopolitical problems associated with the unification of Crimea."

Putin has also revived the Soviet-era practice of staging massive displays of military firepower on Red Square to mark May 9, the allied victory over Nazi Germany in World War Two, one of the most important days in the Soviet and Russian calendars.

Central Moscow streets have been partially closed in recent days as tanks and mobile rocket launchers rehearse for that parade next week.

(Additional reporting by Alexei Anishchuk, Alexander Winning and Vladimir Soldatkin; Editing by Peter Graff)