UPDATE 3-Hong Kong gears up for mass strikes as thousands rally overnight against extradition bill

* Hong Kong protesters want extradition bill scrapped

* Say it undermines freedoms guaranteed to ex-UK colony

* Bill also opposed by some Hong Kong business groups

* HK chief executive vows to press ahead with legislation (Recasts with mass strikes looming, pro-democracy lawmaker, flexible work arrangements for HSBC and Standard Chartered)

By James Pomfret and Greg Torode

HONG KONG, June 11 (Reuters) - Hong Kong braced for mass strikes on Wednesday after thousands braved thunderstorms overnight to stage fresh protests against a proposed extradition bill that would allow people to be sent to mainland China for trial.

Hong Kong Chief Executive Carrie Lam said she would press ahead with the legislation despite deep concerns across large swathes of the Asian financial hub that on Sunday triggered its biggest political demonstration since its handover from British to Chinese rule in 1997.

Thousands more from across various sectors in Hong Kong were expected to join the protesters early on Wednesday as businesses across the city prepared to go on strike.

The bill, which has generated unusually broad opposition at home and abroad, is due for a second round of debate on Wednesday in Hong Kong's 70-seat Legislative Council. The legislature is controlled by a pro-Beijing majority.

"When the fugitive extradition bill is passed, Hong Kong will become a 'useless Hong Kong'," said Jimmy Sham, convenor of Civil Human Rights Front, the main organiser of Sunday's demonstration.

"We will be deep in a place where foreign investors are afraid to invest and tourists are afraid to go. Once the 'Pearl of the Orient', (it) will become nothing."

Lam has sought to soothe public concerns and said her administration was creating additional amendments to the bill, including safeguarding human rights.

In a rare move, prominent business leaders warned that pushing through the extradition law could undermine investor confidence in Hong Kong and erode its competitive advantages.

Sunday's protest, which organisers said saw more than a million people take to the streets, in addition to a snowballing backlash against the extradition bill could raise questions about Lam's ability to govern effectively.

Protesters remained defiant in Wednesday's early hours, rallying peacefully just a stone's throw from the heart of the financial centre where glittering skyscrapers house the offices of some of the world's biggest companies, including HSBC .

One protester sat on a small plastic stool outside the gates of government offices waving Hong Kong's old colonial-era flag featuring a Union Jack, watched by a dozen police officers.

HSBC and Standard Chartered, in addition to the Big Four accounting firms, had all agreed to flexible work arrangements for staff on Wednesday, local media reported.

SECURITY BLANKET

Security was tight in and around the legislature building, with riot police deployed in some areas. Protesters stood under umbrellas in heavy rain, some singing "Hallelujah", as police conducted random ID checks.

Plainclothes officers, in jeans and sneakers and carrying batons and shields, were also deployed, with other reinforcements gathering behind barricades.

Police searched the bags of scores of young passersby and detained some briefly in a nearby metro station. A police officer on the scene who declined to be named said they were searching for weapons to try to stave off any violence.

The Civil Human Rights Front condemned the searches, saying authorities had made people afraid to participate in peaceful gatherings.

Strikes and transport go-slows were also announced for Wednesday as businesses, students, bus drivers, social workers, teachers and other groups all vowed to protest in a last-ditch effort to block the bill.

The Catholic Diocese of Hong Kong called on the government not to pass the bill "hurriedly", and urged all Christians to pray for the former British colony.

Embattled leader Lam, who warned against "radical action" at the latest protest, is herself a Catholic.

Britain handed Hong Kong back to China 22 years ago under a "one-country, two-systems" formula, with guarantees that its autonomy and freedoms, including an independent justice system, would be protected.

But many accuse China of extensive meddling since then, including obstruction of democratic reforms, interference with local elections and of being behind the disappearance of five Hong Kong-based booksellers, starting in 2015, who specialised in works critical of Chinese leaders.

Beijing rejects those accusations and official Chinese media this week said "foreign forces" were trying to damage China by creating chaos over the extradition bill.

Sunday's protest rally plunged Hong Kong into political crisis, just as months of pro-democracy "Occupy" demonstrations did in 2014, heaping pressure on Lam's administration and her official backers in Beijing.

The failure of the 2014 protests to wrestle concessions on democracy from Beijing, coupled with prosecutions of at least 100 protesters, mostly youths, discouraged many young people from going back out on the streets - until Sunday.

Nearly 2,000 mostly small retail shops, including restaurants, grocery, book and coffee shops, have announced plans to strike on Wednesday, according to an online survey, a rare move in the staunchly capitalist economy.

Eaton HK Hotel, which is owned by Langham Hospitality Investments and operated by Great Eagle Holdings , said it respected workers' "political stances" and would allow them to rally.

Pro-democracy lawmaker Claudia Mo encouraged businesses to go on strike "for a day...or probably for one whole week."

Many residents of the financial centre, both expatriate and local, are increasingly unnerved by Beijing's tightening grip over the city.

Human rights groups have repeatedly cited the alleged use of torture, arbitrary detentions, forced confessions and problems accessing lawyers in China, where courts are controlled by the Communist Party, as reasons why the Hong Kong bill should not proceed.

China denies accusations that it tramples on human rights.

On Tuesday, New Zealand's Court of Appeal, citing human rights risks, ordered the government to reassess its decision to extradite a man to China to face murder charges. (Reporting By James Pomfret, Greg Torode, Jessie Pang, Felix Tam, Kane Wu, Vimvam Tong, Thomas Peter, Twinnie Siu Writing by Anne Marie Roantree Editing by Mark Heinrich)