LEIPZIG, Germany (AFP) - Thousands of protesters rallied in the eastern German city of Leipzig Monday against a record refugee influx they blamed for sexual violence at New Year's Eve events.

Many vented their anger at Chancellor Angela Merkel, whom they accuse of destroying their country by allowing in 1.1 million asylum seekers last year.

"We are the people", "Resistance!" and "Deport them!", chanted the flag-waving crowd at the rally of LEGIDA, the local chapter of xenophobic group PEGIDA, the "Patriotic Europeans Against the Islamisation of the Occident".

"Refugees not welcome!" read one sign, showing a silhouette of three men armed with knives pursuing a woman, while another declared "Islam = terror".

A heavy police presence, with water canon at the ready, kept watch over the crowd, and separated them from a group of counter-demonstrators, as rain poured down.

Waving a sign declaring "State of injustice", 44-year-old demonstrator Lukas Richter said "Merkel is breaching the constitution and must go," and that "the government must close the borders and return all illegal migrants".

He charged that the New Year's Eve mob attacks in the western city of Cologne - where hundreds of women reported being groped and robbed by men described as Arabs and North Africans - highlighted "the violence of foreigners in Germany that has existed for years".