* Soldiers storm hotel in capital

* Confusion persists over island's leadership

* African Union to host Madagascar meeting

(Adds analyst, details, background)

By Alain Iloniaina

ANTANANARIVO, April 29 (Reuters) - Madagascar security forces arrested the man named prime minister by ousted leader Marc Ravalomanana during a raid on a hotel in the capital Antananarivo on Wednesday, witnesses said.

More than a dozen armed troops loyal to new President Andry Rajoelina's military-backed administration stormed the city's plush Carlton Hotel before seizing Manandafy Rakotonirina.

The naming of several 'ministers' by allies of Ravalomanana, who quit power last month under pressure from the army but insists he remains president in exile, has increased confusion over who controls the Indian Ocean island.

"The soldiers arrived in at least five 4x4 vehicles and searched the hotel for close to an hour. I heard one shot fired," local journalist Hery Rakotondrazaka told Reuters.

Police and government sources declined to comment.

Tensions have risen in the capital in the last two weeks as Rajoelina's transitional authority cracks down on alleged political opponents and supporters of the exiled Ravalomanana.

At least five people have died in clashes between forces loyal to Africa's youngest president and Ravalomanana's supporters.

On Monday, the military stormed the Constitutional Court and arrested four people.

Analysts say Ravalomanana's attempts to form a parallel government may destabilise Rajoelina in the short term, but that it is unlikely to gain much popular support.

"The big question is whether it is legitimate in the eyes of the people. I don't see it going that far," said Lydie Boka of Lille-based StrategieCo.

Ravalomanana's nominated premier, Rakotonirina, had said on Tuesday his administration had the support of certain civil servants and high-ranking military officers.

Diplomats in Antananarivo say the issue of who exactly is Madagascar's head of state remains a grey area.

Foreign powers including France, the European Union and the United States have denounced Rajoelina's rise to power as a coup d'etat and several have suspended aid.

Both the African Union (AU) and the Southern African Development Community trade bloc have suspended Madagascar.

Madagascar's Foreign Minister Ny Hasnia Andriamanjato is due to lead a delegation to meet AU officials and donor representatives in Ethiopia's capital Addis Ababa on Thursday. (Additional reporting and writing by Richard Lough; Editing by Daniel Wallis and Robert Woodward)

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