* Deadliest unrest of President Garcia’s term
* Threat to torch Petroperu pumping plant
* Pressure on Garcia’s government
By Marco Aquino
TARAPOTO, Peru June 6 (Reuters) - Hundreds of indigenous protesters were holding 38 police hostage early on Saturday in Peru’s Amazon jungle after fights between tribes and police killed up to 33 people in the worst violence of President Alan Garcia’s government.
Demonstrators also were threatening to set fire to an oil pumping station of state-owned Petroperu unless the government told police to halt efforts to clear weeks of blockades of roads and rivers that have hurt food and fuel supplies.
Tribes, worried they will lose control over natural resources, have protested since April to force Congress to repeal new laws that encourage foreign mining and energy companies to invest billions of dollars in the mostly pristine rainforest.
Violence broke out on Friday as police tried to disperse a roadblock on a stretch of highway called "Devil’s Curve" in the Bagua region of Amazonas province, about 870 miles (1,400 km) north of Lima, the capital.
Indigenous leaders said at least 22 protesters were killed. The government reported the deaths of three protesters and 11 police officers, some from spear wounds. At least 100 people were injured and more conflict appeared possible.
"Everyone must know that right now there are 38 police hostage at the pumping station," Prime Minister Yehude Simon said at a news conference late on Friday. He urged calm but defended the government’s use of force.
The bloodshed, which prompted calls for Simon and Garcia’s interior minister to quit, has underscored deep divisions in Peru between wealthy elites in Lima and poor indigenous groups in the countryside.
It also has exposed the central government’s lack of control over remote regions of the country.
Late on Friday, in a separate incident, the army said one soldier was killed and four injured when a remnant band of Shining Path rebels shot explosives at one of its helicopters parked at a base in the coca-growing zone of the Apurimac and Ene Valleys east of Lima.
The group led an insurgency for years against Peru’s government but went into the cocaine trafficking business after its leaders were captured in the 1990s.
Garcia, whose approval rating is 30 percent, suffers from a lack of support in rural areas, especially the Amazon.
Critics say he has not done enough to lower the poverty rate from 36 percent and that economic boom times enjoyed before the current downturn failed to reach the poor.
They also say his policies favoring free-markets and foreign investment mainly benefit elites in cities.
Some of the controversial laws that have upset indigenous groups were passed last year as Garcia moved to bring Peru’s regulatory framework into compliance with a free-trade agreement with the United States.
After the deadly violence on Friday, members of Garcia’s cabinet accused protesters of being inflexible and refusing to negotiate. They said they would impose curfews.
Indigenous leaders expressed outrage and said Garcia’s allies acted in bad faith when they blocked a motion in Congress on Thursday to open debate on a law that tribes want overturned.
"I hold the government of President Alan Garcia responsible for ordering this genocide," indigenous leader Alberto Pizango told reporters in Lima. (Writing by Terry Wade; Editing by Bill Trott)