By Aaron Maasho

ADDIS ABABA (Reuters) - Ethiopia on Friday lifted a state of emergency imposed last October following months of protests that killed hundreds of people.

More than 29,000 people were arrested during the period

and nearly 8,000 of them are on trial for taking part in the violence, Defence Minister Siraj Fegessa said.

The unrest was provoked by a development scheme for the capital Addis Ababa and turned into broader anti-government demonstrations over politics and human rights abuses. It included attacks on businesses, many of them foreign-owned, including farms growing flowers for export.

"The country's stability is in far better shape. In some areas where security issues remain, local security forces have the capacity to restore order," Fegessa said in a report read in parliament.

Siraj said nearly 29,000 people were arrested in the provinces of Oromiya, Amhara and SNNP, as well as Addis Ababa during the period.

"7,737 of them are currently on trial over charges of taking part in violent and terrorist acts during the unrest," he said.

Measures initially imposed under the declaration included granting powers to security services to stop and search suspects and to search homes without court authorization.

Another rule barred diplomats from traveling beyond a 40 km (25 miles) radius of the capital without permission. There was also a dusk-to-dawn curfew on access to economic installations, some infrastructure and factories for unauthorized people.

Those restrictions were eased in March but Addis Ababa maintained a ban that stopped citizens from having any contact with opposition groups branded as terrorist movements.

Ethiopia has designated five groups, including two armed secessionist groups, as terrorist organizations.

Another directive barring the "preparation, distribution and exhibition of material that could incite chaos" was also retained in March.

The violence in Oromiya, the largest and most populous region which surrounds Addis Ababa, and to a lesser extent in the Amhara province north of Addis Ababa, put a shadow over a nation where a state-led industrial drive has created one of Africa's fastest growing economies.

The government also often faces international criticism and opposition to its authoritarian approach to development.

In April, a government-sanctioned investigation said 669 people had been killed in the violence.

The United Nations High Commissioner for Human Rights Zeid Ra'ad Al Hussein has called on Ethiopia to allow his agency to investigate abuse claims.