* Bolivians march, block roads after fuel prices leap
* Defiant Morales defends decision to slash subsidies
* Price hike turns trade unions against leftist leader
LA PAZ, Dec 30 (Reuters) - Protests in Bolivia by bus drivers and neighborhood groups over a fuel price hike gripped several cities on Thursday in a mounting challenge to leftist President Evo Morales.
The government’s decision to slash fuel subsidies -- sending prices soaring by as much as 83 percent -- has sparked outrage in a country rich in natural gas, landing Morales with one of the biggest crises since he was re-elected last year.
Morales, a close ally of fiery Venezuelan President Hugo Chavez, enjoys solid support among Bolivia’s poor indigenous majority but the fuel price hike has angered his leftist base.
The president, who announced wage increases on Wednesday in an apparent attempt to calm protests over the so-called “gasolinazo” measure, defended the price hikes again on Thursday as a vital tool to cut imports and spur investment in oil output.
“This is the end of a neoliberal subsidy that caused corruption,” Morales told a news conference, referring to the brisk trade in smuggling subsidized Bolivian diesel and gasoline across the border to Peru.
The end of the fuel subsidies is expected to save the state about $380 million each year.
At least 1,000 people from the sprawling slum city of El Alto marched to nearby La Paz on Thursday, one of many protests planned for the Andean country’s administrative capital.
“Evo, we’re the people ... Correct this mistake,” said Fanny Nina, head of the FEJUVE group of neighborhood associations in El Alto, which has nearly 1 million residents and is traditionally a Morales stronghold.
Between 2003 and 2005, two Bolivian presidents were toppled amid protests in which El Alto residents played a central role.
Elsewhere in highland La Paz, striking bus and truck drivers blocked bridges and road junctions and there was nearly no public transport in the city.
Local media said attackers assaulted several bus drivers who went to work.
Similar scenes were repeated in other cities but bus drivers scrapped plans to go on strike in eastern Santa Cruz, the country’s economic hub and an opposition stronghold.
Despite persistent power struggles between the lowland east and highland west, Bolivia has enjoyed relative stability since Morales was elected in 2005 as its first indigenous president.
Miners, teachers and peasant farmers often take to the streets to press specific demands but most still back Morales because of his efforts to redistribute wealth from vast natural gas reserves.
But opposition to the fuel price hike has brought together a variety of groups who fear that food, transport and consumer goods will soon be out of the reach of many poor Bolivians. (Writing by Helen Popper; Editing by John O’Callaghan) (firstname.lastname@example.org; +54 11 4318 0655; Reuters Messaging: email@example.com))
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