UPDATE 2-Divisions over Brazil's coronavirus response grow

BRASILIA, March 31 (Reuters) - Brazil’s economy minister on Tuesday said the country needed to strike a balance between social isolation policies and protecting the economy, hours after President Jair Bolsonaro said hunger was just as big a threat as the coronavirus itself.

Paulo Guedes’s comments underscored the divisions at the top that have characterized Brazil’s response to the pandemic and come as Bolsonaro’s own chief of staff said cabinet backed social distancing policies that the president had decried.

Guedes also sought to defend the government’s “war budget” in response to the economic effects of the crisis and rebut critics who have called his continued focus on austerity misguided, saying total spending so far is around 800 billion reais ($154 billion) and could rise further.

Concerns about the pandemic’s impact and a wider retreat from risk assets have walloped Brazil’s currency and stock market, with the latter losing more than half its value in dollar terms in the first three months of the year.

Bolsonaro, a far-right populist, has grown increasingly isolated over his belief that keeping the economy running is more important than strict quarantine measures advocated by state governors, public health ministers and even his health minister, Luiz Henrique Mandetta.

Mandetta again appeared to contradict Bolsonaro on Tuesday, repeating his view that maximum social distancing remains vital to stopping the spread of the virus.

“Those who are under 40 years of age have almost zero chance of death. So there’s no reason not to let these people work. After all, if the virus kills in some cases, hunger also kills,” Bolsonaro told journalists and supporters gathered outside his presidential residence in Brasilia.

The event was marked by ugly scenes when Bolsonaro’s supporters harassed reporters.

After a question about Mandetta, who has argued in favor of social isolation measures, a Bolsonaro supporter shouted that journalists were “pitting the people against the president.”

Bolsonaro responded by encouraging the supporter to speak and telling journalists to be quiet. “It is he who will speak, not you,” the president said.

When the journalists withdrew from the scene, Bolsonaro appeared to mock them, asking them if they were “going to abandon the people?” After a few minutes, Bolsonaro resumed talking with reporters.

Polls show that Bolsonaro’s popularity is falling due to his handling of the outbreak, which he has repeatedly called a “little flu.” Most nights, Brazilians cooped up in their apartments have taken to banging pots and pans in protest, often screaming “Bolsonaro out!”

$1 = 5.20 reais Reporting by Lisandra Paraguassu, Ricardo Brito and Marcela Ayres Writing by Ana Mano, Jamie McGeever and Christian Plumb Editing by Louise Heavens, Alistair Bell and Sam Holmes