By Jane Wardell

SYDNEY (Reuters) - Australian Prime Minister Malcolm Turnbull on Sunday used “Brexit” shockwaves to urge voters to return his government with a majority at a July 2 election, arguing only stable government can deliver jobs, economic growth and tough border controls.

After a tight eight-week campaign, Turnbull's Liberal Party-led coalition is facing a strong challenge from the opposition Labor party and popular independents who could win enough seats to hold the balance of power in the upper house Senate.

The poll comes as Australia attempts to rebalance its economy away from a once-in-a-generation mining boom stymied by tumbling commodities prices.

Domestic economic issues such as tax and the funding of education and health care have dominated the campaign.

Border security has also been a hot button issue, giving rise to the return of far right political groups, even though the numbers of asylum seekers trying to reach Australia pales in comparison to those fleeing to western Europe.

"The opportunities have never been greater, but so is the competition, and so are the uncertainties," Turnbull said in a speech in Sydney.

"The shockwaves in the past 48 hours from Britain’s vote to leave the European Union are a sharp reminder of the volatility in the global economy," he added.

Britain's vote to exit the EU has sent political and financial shockwaves around the world. "This is a time which demands stable majority government," said Turnbull.

Turnbull prompted the election by dissolving both houses of Parliament in May, blaming intransigent independents in the Senate for blocking his agenda.

But he may not find himself any better situated after the poll due to the growing appeal of independent Nick Xenophon, whose new party is fielding almost 50 candidates.

Xenophon could emerge as kingmaker in a hung parliament if opinion polls putting Turnbull's Liberal-National coalition neck-and-neck with opposition Labor prove correct.

A further destabilizing factor could be the return of far right parties, including Pauline Hanson's One Nation, which are campaigning on anti-immigration, anti-Muslim agendas.

Turnbull's speech in Sydney coincided with clashes in Melbourne between anti-immigration and anti-racism protesters. Hundreds of riot police were drafted in to keep the groups separate, arresting several people as scuffles broke out and Australian flags were burned.

Australia has seen a revolving door of political leadership in recent years. If Turnbull loses on July 2, the change in prime minister would be the fifth since 2010.

(Additional reporting by Jarni Blakkarly in MELBOURNE)