MAPUTO/BLANTYRE, Dec 27 (Reuters) - More than 2,000 Mozambican families have sought refuge in Malawi this week, Malawian authorities said, as dozens of people were reported killed in spreading unrest over a disputed election in October.

Some businesses including banks were closed in Mozambique's capital Maputo on Friday and patrols were set up in some areas following a deadly prison riot and breakout on Wednesday.

Mozambique has been gripped by violent protests for about two months since the electoral commission said the ruling Frelimo party had retained power and its candidate won the presidency in the election. Frelimo denies opposition accusations of electoral fraud.

A decision by Mozambique's Constitutional Council to validate the election results on Monday triggered more demonstrations.

Monitoring group Plataforma Decide put the death toll at 125 since the court's decision and at 252 since late October.

A senior Malawian official said that as of Wednesday, 2,182 Mozambican households fleeing the violence had crossed into Malawi's Nsanje district, which borders Mozambique.

"The situation remains dire as these individuals urgently require humanitarian assistance," Nsanje district commissioner Dominic Mwandira said in a letter to the country's commissioner for refugees seen by Reuters.

Mozambique's main opposition leader Venancio Mondlane, who the Constitutional Council said had come second in the presidential election and who rejects the results, has called for more protests from his supporters but urged them not to loot and damage infrastructure.

The unrest has affected foreign firms operating in Mozambique, including mining companies Gemfields Group GEMGE.L and South32 S32.AX and petrochemical company Sasol SOLJ.J.

Operations at Gemfields' biggest ruby mine in Mozambique were temporarily halted on Tuesday after violent incidents near the mine, it said in a statement on Friday.

More than 200 people had attempted to gain access to a residential site for mine employees and set fire to structures, it said. Mozambican security forces shot and killed two people, Gemfields said.

The prison riot in Maputo on Christmas Day left at least 33 people dead and saw more than 1,500 prisoners escape before some were recaptured.

Frelimo has ruled Mozambique since the end of the war against Portuguese colonial rule in 1975. Western observers have said this year's election was not free and fair.

(Reporting by Frank Phiri in Blantyre and Custodio Cossa in Maputo; Additional reporting by Yamini Kalia; Writing by Bhargav Acharya; Editing by Alexander Winning and Angus MacSwan)

((Bhargav.Acharya@thomsonreuters.com))