By Malena Castaldi

MONTEVIDEO (Reuters) - Jorge Batlle, a veteran politician who was the fourth member of his Catalan immigrant family to be president of Uruguay, died on Monday, a day before his 89th birthday.

Battle died at Sanatorio Americano clinic in Montevideo following an operation to treat a blood clot following a fall earlier this month, the clinic said.

A centrist leader of the right-wing Colorado Party, he sought closer ties and free trade pacts with the United States during his 2000-2005 presidency that was also marked by one of the South American country's worst-ever financial crises.

In 2002, Uruguay broke off diplomatic relations with Cuba after Cuban leader Fidel Castro called Batlle a "lackey" of the United States for backing U.S. criticism of rights abuses under his communist government.

Batlle caused a diplomatic incident with neighboring Argentina in 2002 when he said in an interview that its government was very corrupt and Argentines were "a bunch of thieves." He was forced to fly to Buenos Aires a few days later to apologize.

He also created controversy by saying he favored legalizing cocaine to end the power of drug cartels. "If that little powder was worth only 10 cents, there would be no organizations dedicated to raising a billion dollars to finance armies in Colombia," he said in 2002.

The name of the Batlle political dynasty abounds in the South American country - on streets signs and squares and in its history books. Previous presidents in the family were Lorenzo Batlle (1868-1872), Jose Batlle (1903-1907 and 1911-1915) and Luis Batlle (1947-1951), Jorge Batlle's father.

A fiery orator with flowing gray hair and a slightly disheveled, bohemian appearance, the tall and slim Batlle won the presidency on his fourth attempt.

He was a free-marketeer in economic policy and cultivated a friendship with former U.S. President George H.W. Bush. In 2002 Batlle secured an emergency $1.5 billion loan from the United States under George W. Bush to help resolve a banking crisis.

A former lawyer and respected radio journalist, he was imprisoned for several months after a military coup in 1973 and banned from political activity in 1976. He was elected to the Senate in 1984 general elections for a government to replace the military dictatorship which stood down in March 1985.

Steeped from birth in the family tradition of politics, he spent his childhood in the gardens of his great uncle, Jose Batlle, who was known as the father of modern Uruguay for his reforms giving women the vote, providing free education and introducing an eight-hour working day.

An agnostic, he had two children by his first marriage. He later married Mercedes Menafra, who was constantly at his side during his political campaigning.

(Editing by Richard Pullin)