On Oct. 3, at least 366 mostly Eritrean men, women and children drowned in one of the worst migrant sea disasters when the boat they had taken from Libya sank less than a km from Lampedusa

* Anger at exclusion of shipwreck survivors from funeral

* Navy and coast guard rescue more than 700 migrants

* Letta says EU takes "step in right direction" on immigration (Recasts lead with protest, adds PM Letta comment)

By Naomi O'Leary and Steve Scherer

ROME, Oct 25 (Reuters) - Hundreds of Eritreans staged a symbolic funeral procession in front of Italy's parliament on Friday to remember refugees who drowned in a shipwreck this month, as ships rescued more than 700 seaborne migrants overnight.

Italian naval and coast guard vessels rescued the migrants, including dozens of women and children, from five different boats in the waters between Sicily and North Africa, as European leaders tried to address a deepening immigration crisis.

On Oct. 3, at least 366 mostly Eritrean men, women and children drowned in one of the worst migrant sea disasters when the boat they had taken from Libya sank less than a kilometre from the Italian island of Lampedusa.

Italian Prime Minister Enrico Letta pressed European Union leaders meeting in Brussels on Thursday and Friday to increase aid to Mediterranean countries including Italy, Greece and Malta, which have borne the brunt of the crisis.

Europe "finally took a step in the right direction" on immigration, Letta told reporters after the summit, though it yielded no concrete shifts in EU immigration policy.

Men carried coffins on their shoulders outside Italy's lower house of parliament to protest at the handling of Monday's real funeral service for those who drowned off Lampedusa.

The Eritrean ambassador to Italy attended the ceremony, which was held in Sicily, while the 155 survivors of the shipwreck were denied permission to travel from Lampedusa to Sicily, even though many had family members among the dead.

Eritrean men often flee forced military service. Those refugees who reach Italy normally seek political asylum, citing persecution by President Isaias Afewerki's government, which the United Nations human rights chief has accused of summary executions, torture, and the detention of between 5,000 and 10,000 political prisoners.

Some of the protesters in Rome wore t-shirts reading: "The Afewerki regime is responsible for the dead in Lampedusa."

"It's a dictatorship and the situation is very bad in Eritrea," said Kebir, 38, who fled military service 10 years ago and reached Italy by boat from Libya. "Eritrea is an open-air prison."

Kebir did not want to give his surname for fear that the government would punish his relatives at home.

Of more than 32,000 migrants who have made the journey to southern Italy by boat so far this year, about a third are Eritrean, according to the United Nations. (Reporting by Naomi O'Leary and Steve Scherer; Editing by Kevin Liffey)

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