By Sofia Menchu

GUATEMALA CITY (Reuters) -The U.S. and European Union warned of a threat to democracy in Guatemala after a court suspended an anti-corruption party whose candidate is running for president.

On Thursday morning, prosecutors raided the electoral court's citizen registration office as part of a probe into the Semilla party, which they allege has more than 5,000 illegally affiliated members, including 12 deceased people.

The suspension "threatens the basic foundations of democracy," the EU electoral mission in the Central American country said in a statement, adding courts had used "dubious" legal means to interfere in the elections.

The election to succeed outgoing President Alejandro Giammattei, who by law cannot run again, has sparked international criticism after early opposition candidates were disqualified, amid widespread voter anger over corruption.

Semilla presidential candidate Bernardo Arevalo is set to face former First Lady Sandra Torres in an Aug. 20 run-off.

Polls had shown Arevalo - an ex-diplomat and son of former Guatemalan President Juan Jose Arevalo - as a distant outsider ahead of a first round of voting on June 25.

But his surprise second-place finish has led many analysts to believe he could win the presidency.

In a press conference on Thursday, Arevalo said he would challenge prosecutors' move against Semilla, which he claims violated Guatemalan law as a political party cannot be suspended in the middle of an election.

"We are in the electoral race, we are moving forward and we will not be stopped by this corrupt group," Arevalo said.

On Wednesday night, after the suspension, a senior U.S. official warned of a threat to democracy.

"We are deeply concerned by threats to Guatemala's electoral democracy. Institutions must respect the will of voters," Brian A. Nichols, assistant secretary of state for Western Hemisphere Affairs, said on Twitter.

The electoral court on Wednesday finally confirmed the first round results after the ruling party and various allies requested a ballot review, alleging irregularities.

Prosecutor Rafael Curruchiche, whose anti-impunity office requested Semilla's suspension, has previously targeted anti-graft campaigners and has been placed on the U.S. State Department's Engel List for "corrupt and undemocratic actors."

(Reporting by Sofia Menchu; Writing by Kylie Madry; Editing by Sarah Morland, Stephen Eisenhammer and Josie Kao)