LATACUNGUA , Ecuador (REUTERS, AFP) - Ecuador's President Rafael Correa on Saturday declared a state of emergency following increased activity the day before at the giant Cotopaxi volcano, giving the government greater leeway to mobilise financial resources in the event of an eruption.

Two minor explosions on Friday at Cotopaxi, located about 70km south of Quito, led to a precautionary evacuation of small towns in the centre of the country. Plumes of dust and ash were shot 8km into the sky.

"We declare a state of emergency due to the unusual activity of Mount Cotopaxi," Correa said during his weekly Saturday address. "God willing, everything will go well and the volcano will not erupt."

The move allows the President to immediately mobilise security forces throughout the country and lets the government block publication of information related to Cotopaxi.

The state of emergency may not exceed 60 days.

Correa said that about 400 people have been voluntarily relocated to shelters, after the explosions and expulsion of ash surprised nearby residents on Friday.

The Environment Ministry closed the Cotopaxi National Park as a precaution.

Cotopaxi is one of the world's highest active volcanoes and is popular with tourists. The last eruption took place in 1940, according to the Smithsonian Institution's Global Volcanism Programme.

Officials warned residents of potential landslides of volcanic debris, or lahars.

Residents in towns and river settlements in Cotopaxi province, some 45km south of the capital Quito, were told to clear out, said Pablo Morillo, head of the Secretariat for Risk Management.

Officials did not specify how many people could be affected by the evacuation order.

In the city of Latacunga, home to about 170,000 people, sirens sounded as residents frantically fled, packing food, water and pets into cars that quickly clogged the roads.

"I was driving near the Cutuchi River and police came out with sirens, alerting us, and moving from house to house to draw people out. The sirens distressed us," one woman told AFP, without providing her name.

Soldiers could be seen in the streets of Latacunga on Saturday, along with cars carrying mattresses, motorcycles and other household items.

YELLOW ALERT

Authorities maintained a yellow alert in the region, a mid-range warning, and said it would remain as long as Cotopaxi continued to stir.

"We will maintain the same alert, but since there are still no lahar flows, the evacuation order is still only preventive," Morillo told AFP.

The volcano, which towers to 5,897m high, is considered to be one of the most threatening in the region - both because of its size and because it is so close to well-populated towns.

The volcano spewed a current of hot glass and rock - called pyroclastic flow - which authorities warned could trigger avalanches or lahars.

"Due to the pyroclastic flows that can generate lahars, preventative evacuations (are ordered) on the southern part" of the volcano, the Risk Management office said on Twitter.

The Geophysical Institute also cautioned residents: "At present there have been no lahars, but they could occur."

Quito Mayor Mauricio Rodas said one million surgical masks would be distributed across the city of 2.3 million people, to prevent inhalation of falling dust.

Some residents could be seen wearing masks Friday as they fled villages, with a large, angry cloud of grey dust and ash forming over Cotopaxi.

The Environment Ministry has declared the volcano off limits to tourists, and 15 climbers who were preparing to scale the mountain were sent home Friday.

Cotopaxi is one of eight active volcanoes in Ecuador, a country that is part of the so-called Pacific Ring of Fire that makes it prone to seismic and volcanic events.

Its snow-covered tip has been described as "majestic" and is a popular climbing destination.