Senegalese President Abdoulaye Wade's bid for a third mandate in next month's election, which has triggered a number of protests, could endanger his country's record of democracy and stability, the United States warned on Monday.

Local media and a resident in the northern town of Podor said two people were killed on Monday in the latest pocket of unrest since Senegal's top legal body said Wade could stand despite complaints it breached rules setting a two-term limit.

A policeman died when protesters hurled rocks, overturned cars and set fire to tyres in the streets of Dakar on Friday, when the decision was made public. Opposition appeals were rejected late on Sunday.

The warning was the strongest comment yet from Washington about the February 26 election in the only country in mainland West Africa to have never suffered a coup d'etat. Separately, France also issued concerns over the election process.

We are concerned that the decision by President Wade to seek a third term ... could jeopardise the decades-long record that Senegal has built up on the continent for democracy, democratic development and political stability, U.S. Deputy Secretary of State William Burns told a teleconference.

We hope very much that the political process will be a peaceful one and it will allow for the free active participation of all Senegalese, added Burns, who was speaking from the sidelines of an African Union summit in Addis Ababa, Ethiopia.

Wade has chosen to stay in Senegal and not attend the summit, an event he has rarely missed in the past. Truckloads of police in riot gear have been deployed around his presidential palace, armed with teargas, grenade launchers and truncheons.

A woman who was headed to market and a 17-year-old student, were killed during the anti-Wade demonstration in Podor, according to local media and a resident contacted by Reuters in the town on the border with Mauritania.

A gendarmerie spokesman said the incident were under investigation.

CONSTITUTIONAL COUP

Hours before Burns' comments, Senegal's Constitutional Council rejected appeals to its decision to approve Wade's candidacy while throwing out the presidential bid of world music star Youssou N'Dour. It argued that N'Dour had not collected the 10,000 valid signatures needed to stand.

France regrets that all political viewpoints cannot be represented, French Foreign Ministry spokesman Bernard Valero said in Paris of the list of 14 approved candidates, which includes three ex-premiers and the Socialist party candidate.

Valero also raised concerns over the arrest on Saturday of Alioune Tine, a leader of the M23 street protest movement.

On principle we condemn any use of the justice system for political ends, he added.

The U.S. and French statements are a sign of the growing international concern over Senegal, where the 85-year-old Wade has ruled over the poor, mainly agricultural country with a mixed record since defeating rival Socialists in a 2000 vote.

Domestic critics say Wade has done little to tackle mass unemployment and the crumbling infrastructure in many Senegalese towns while he lavishes spending on grandiose projects such as a monument to African Renaissance which now towers over Dakar.

Wade, who was re-elected in 2007, said his first term cannot be counted in a two-term limit added to the constitution in 2001. The five judges of the Constitutional Council - all picked by him - agreed with that interpretation.

N'Dour condemned the ruling as a constitutional coup d'etat, while other opposition leaders have threatened to make the country ungovernable. While Dakar was calm on Monday, M23 activists said they were planning new protests.

A centrist liberal who spent 26 years in opposition before he came to power, Wade has said he is confident of securing election in a single round.

Opponents fear his grip on state machinery gives him an advantage and that the poll will be neither free nor fair. The European Union has sent as 90-head election observer mission.

(Additional reporting John Irish in Paris; Writing by Mark John and David Lewis; Editing by Alison Williams)