* Protesters set up barricade outside university

* Standoff with police shuts down vital thoroughfare

* Activists say they are reacting to police violence (Adds protests in another area, damaged police vehicle towed away, paragraph 14-15)

The police statement followed fresh clashes outside a university in the centre of Hong Kong where protesters were hunkered down behind makeshift shields and hurled petrol bombs at police in a standoff blocking a vital tunnel link.

Police had said on Sunday one officer had been treated in hospital after being hit in the leg by an arrow and another had his visor struck by a metal ball, although he was not hurt.

The violence in the Asian financial hub has posed the gravest popular challenge to Chinese President Xi Jinping since he came to power in 2012. Xi has said he is confident Hong Kong’s government can resolve the crisis.

In Monday’s statement, police warned people who they described as rioters to stop using lethal weapons to attack officers and to halt other acts of violence, saying office would respond with force and possibly live bullets if necessary.

Police have used live rounds in a few isolated incidents in the past.

Demonstrators, angry at what they see as Chinese meddling in the former British colony which has had autonomous status since returning to Chinese rule in 1997, have said they are responding to excessive use of force by police.

“The protesters have been reacting to the police,” said Joris, 23, a civil engineer who like others did not give his full name. “We haven’t fought back as much as we could. I would be prepared for jail. We are fighting for Hong Kong.”

Beijing denies interfering in Hong Kong’s affairs and has blamed foreign influences for the unrest.

“TRAPPED HERE”

In the road leading to Hong Kong Polytechnic University, police vehicles with water cannon advanced on barricades set up by protesters but pulled back when petrol bombs were thrown. The standoff blocked the tunnel linking Kowloon to Hong Kong island.

“We’ve been trapped here, that’s why we need to fight until the end. If we don’t fight, Hong Kong will be over,” said Ah Lung, a 19-year-old protester.

Many protesters wore gas masks or tied handkerchiefs over their mouths and noses to protect them from clouds of tear gas. Some stripped down to their underwear, after earlier dousings from water cannon that witnesses said contained an irritant.

An armoured police vehicle that was set ablaze by petrol bombs in Sunday’s violence was towed away early on Monday.

Several blocks from the university, black-clad protesters gathered in Nathan Road, another major thoroughfare, digging up pavements and using bricks to block roads. The demonstrators shouted: “Liberate HK, revolution of our time.”

Police had said on Sunday that police had fired a bullet but did not give details about the latest use of live ammunition. Police had shot and critically wounded a protester on Nov. 11.

Chinese soldiers in a base close to the university were seen on Sunday monitoring developments with binoculars, some dressed in riot gear, Reuters witnesses reported.

Chinese troops in shorts and T-shirts, some carrying red plastic buckets or brooms, had emerged from their barracks on Saturday in a rare public appearance to help clean up debris.

The presence of soldiers from China’s People’s Liberation Army (PLA) on the streets, even to clean up, risks stoking the controversy about Hong Kong’s status as an autonomous area.

Chinese troops have appeared on Hong Kong’s streets only once since 1997, to help clear up after a typhoon last year.

(Reporting by Simon Gardner, Marius Zaharia, James Pomfret, Josh Smith, Jessie Pang, Joyce Zhou, Kate Lamb and Tom Lasseter; Writing by Nick Macfie; Editing by Edmund Blair)