HONG KONG (Reuters) - Thousands protested in Hong Kong on Wednesday pressingChina to allow full democracy in the city as a battle intensifies over Beijing's attempts to control the outcome of a planned direct election for the city's leader in 2017.

Beijing had promised direct elections in the former British colony as the goal for 2017, but the devil is in the details of the rules governing who can run.

Pressure has been building between democratic forces in the financial hub, which returned to Chinese rule in 1997, and China's stability-obsessed Communist Partyleaders who fear a rival democrat being voted into office.

Protesters at the annual New Year's Day democracy rally shouted slogans demanding full democracy in 2017, with a key condition being the open nominations of candidates so that anyone, including China critics, can run for office.

But Chinese officials and leftist newspapers have rejected that, citing the city's mini-constitution that states all nominees must be endorsed by a 1,200-strong election committee, which is stacked with Beijing loyalists.

"There's more and more interference (from Beijing)," said Tsang Fan-yu, a designer who was at Wednesday's protest with his seven-year-old son for their sixth consecutive year.

"We have to come out to make our voices heard. The form of democracy Beijing wants is unacceptable. It's fake."

A cluster of banners read "Real Universal Suffrage. No pre-screened election", while protesters also called on the city's embattled and pro-Beijing leader, Leung Chun-ying, to step down after a series of scandals.

"We want to see Hong Kong people have a genuine choice in electing their leaders," said Anson Chan, a respected former head of the civil service, who was at the rally.

Discord over the city's democratic future could culminate in a protest this summer called "Occupy Central", seeking to shut down the central business district of one ofAsia's most important financial centers.

"No direct election? See you in Central!" read one of the banners.

A New Year civil referendum was also launched to gauge the public's preferences for the 2017 poll, with some 50,000 Hong Kong residents having voted by late afternoon.

"Hong Kong's political future has now come to a critical moment," said Johnson Yeung, one of the rally organizers. "The 2014 New Year's Day rally will become the first field of battle between the public and the government."