Basque separatist violence spread yesterday from riot-torn Pamplona, where demonstrators clashed with police for the third day, to San Sebastian, where bands of Basque youths blocked a main highway with blazing barricades and forced shopkeepers to close their stores.

They also smashed the windows of the new casino in a San Sebastian hotel, according to an eyewitness, firebombed bank buildings and tried to seize the a government office Barricades were reported throughout the city, long a astion of separatist sentiment.

There were indications that separatist demonstrations in sympathy with Pamplona would erupt in other parts of the restive Basque country. Tension in the region is such that Premier Adolfo Suarez met with the Cabinet to consider the explosive Basque problem. Police reinforcements have been rushed into the northern provinces.

New violence broke out in Pamplona early yesterday afternoon following the burial of a 23-year-old leftist student shot by police Saturday in fighting that left 135 persons injured and the city in shambles.

Recurrent street fights in Pamplona have forced the cancellation of the San Fermin bullfight fair, an ancient Basque festival made farious by Hemingway in his novel "The Sun Also Rises."

Thousands of tourists - including many Americans who went to Pamplona to join the traditional running of the bulls - left the city over the weekend.

The government-controlled television, which broadcast a film of fighting in the Pamplona bull arena, but it from late broadcasts. The film reportedly angered conservative viewers and others angry about Basque separatist violence.

Yesterday's outbreak in Pamplona began when thousands of mourners returning from the cemetery to the city began to shout "police assassins." Riot police responded with fusillades of rubber bullets and smoke bombs.

The government has passed special police measures to combat the spiral of separatist terrorism against police and supporters of either the government or the late dictator Francisco Franco.

The new antiterrorism decree has angered even moderates in the Basque country where it is considered a revival of the Franco era's repression. Officials defended the decree, which gives police extraordinary powers, on the ground that it is necessary to show police and the military that the government is determined to end Basque violence.

In the past two weeks there have been 10 violent deaths in the region. Over the weekend, separatist gunmen killed killed a justice of the peace and wounded a detective in a gunfight in Bilbao.