By Sahabi Yahaya

KATSINA, Nigeria (Reuters) - Thousands of mourners attended the funeral in the northern Nigerian town of Katsina on Thursday of President Umaru Yar'Adua, who died in the capital Abuja after a long illness.

Crowds of men dressed in multi-coloured traditional robes flocked to the stadium in Yar'Adua's arid hometown near the border with Niger, on the edge of the Sahara desert, for the Islamic funeral of the 58-year-old leader.

Mourners carried Yar'Adua's body, covered by Nigeria's green and white flag, on a bamboo stretcher to the open field for prayers and then burial at a nearby cemetery.

"The death of President Yar'Adua is a great loss to democracy and a loss to the country and the whole of Africa in general," said 56-year-old Katsina resident Ibrahim Ahmed.

A who's who of the OPEC member state's political elite, including newly sworn in President Goodluck Jonathan, traditional rulers, former heads of state, and other dignitaries paid their respects.

Thousands more sat quietly under the shade of trees outside the stadium under the watch of armed police and soldiers. Businesses and shops were shuttered and side roads were clogged with bumper-to-bumper traffic.

Yar'Adua died peacefully late on Wednesday in the presidential villa after a long fight with kidney and heart complaints. He was 58.

Jonathan was sworn in as head of state in Africa's most populous nation hours later and must now pick a new vice president. The two will then see out the unexpired term of office ahead of elections due by next April.

Yar'Adua served two terms as governor of Katsina before being plucked from relative obscurity as the ruling party candidate in the 2007 polls that brought him to office.

"The nation has lost an honest leader that meant well for all Nigerians," Senate President David Mark said in a statement.

"His record of prudence and administrative excellence both as a state governor and president will remain evergreen in our memories."