DRESDEN, Germany (Reuters) - President Frank-Walter Steinmeier told Germans they must reject racism and anti-Semitism at a commemoration of the 75th anniversary of Allied bombing raids on Dresden, which killed 25,000 people near the end of World War Two.

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In Dresden, a far-right stronghold where resentment over what neo-Nazis call the “bombing holocaust” lingers, Steinmeier addressed a somber ceremony that included forming a human chain to remember victims.

In a mission to destroy civilian morale, British planes pounded Dresden with explosive and incendiary bombs on the night of Feb. 13, creating a firestorm that tore through streets and laid waste to the city’s Baroque churches and palaces. U.S. planes joined later.

The bombing of Dresden reminds Germans of the destruction of democracy, nationalist hubris, contempt for humanity, anti-Semitism and racial fanaticism, Steinmeier said in his speech.

“I fear these dangers have not been banished to this day,” he said, adding they were starting to poison Germany’s public life and democratic institutions.

It is not enough for democrats to turn away in disgust, he said. “None of this must remain unchallenged in our country. We must all reject hatred and incitement, counter insults, contradict prejudice,” he said.

Historians say the bombing fed a myth of victimhood invented by the Nazis, taken on by East German Communists and later adopted by the far right.

Today, that manifests itself in annual demonstrations by neo-Nazis from across Europe. Dresden was the cradle of the PEGIDA anti-Islam group and the city is braced for far-right protests on Saturday.

On Monday, Bjoern Hoecke - a radical regional leader of the far-right Alternative for Germany (AfD) who a court has ruled may be described as a ‘fascist’, will join a PEGIDA march in Dresden.

The commemoration comes a week after Hoecke, who wants German history books to be rewritten to emphasize German suffering over that of Jews in World War Two, caused a political earthquake.

Breaking a post-war consensus among established parties to shun the far right, lawmakers in Chancellor Angela Merkel’s conservatives in the eastern state of Thuringia voted with Hoecke’s AfD to install a state premier from a third party.

The scandal was so great that it caused Merkel’s protegee, Annegret Kramp-Karrenbauer, to abandon her ambition of running for chancellor.

Dresden residents still remember the night when bombers hit the city. Nora Lang, now 88, was 13.

“Those were the most horrible hours of my life,” Lang said in her Dresden apartment. “The mortal fear and the helplessness - it all came from above, tonnes of it.”

Nora and her younger brother had been separated from her parents and her older brother but managed to find refuge as buildings around them were destroyed in the inferno.

“I thought maybe this is the end of the war and at the same time I thought it’s the end of the world,” she recalled.