April 19 (Bloomberg) -- The death toll in a massacre of independent diamond miners on an Amazon Indian reservation rose to 41, authorities said, adding to the unrest of land seizures and strikes that are eroding support for President Luiz Inacio Lula da Silva.

Cinta Larga Indians in the northwestern state of Rondonia killed the invading diamond miners to keep control of an area where the world's biggest diamond reserve is located, Eranildo Costa Luna, spokesman for the state's governor's office, said in a telephone interview. About 29 bodies have been recovered, Costa said. Witnesses have reported the location of a dozen more bodies, and about 20 more miners have probably been killed since April 7, Costa said.

Lula is facing a wave of protests from union leaders, peasant organizations and Indians, some of his oldest supporters, as he cuts government spending to control inflation. Land conflicts have become the president's most pressing problem and threaten to erode support for Lula's Workers' Party, which faces elections in 5,500 cities across Brazil in October, said economists such as UBS AG's Victoria Werneck.

Rondonia state Governor Ivo Cassol criticized the federal government for blocking the entry of federal police into the reserve after receiving word of a conflict, Costa said from Porto Velho, Rondonia's capital. At stake is a region where $2 billion in diamonds have been extracted illegally in the past four years, Rondonia state legislator Haroldo Campos said in a telephone interview.

Lula's Popularity

All resources on an Indian reservation by law belong to the tribe, and Indians, armed with automatic weapons and rifles, are resisting incursions by non-Indian miners.

Lula, whose popularity sank to a record low of 34 percent this month after his government got ensnarled in corruption allegations, called on workers and peasants to stop protests and halt farm invasions. Peasant groups stepped up seizures of private-owned land by fivefold in the weeks following the allegations, made public in February.

``Those who go radical never end up ok,'' Lula said during his bimonthly radio program. ``People cannot just lose their good sense.''

Riot police used tear gas and clubs to force dozens of squatters from several empty buildings in Sao Paulo, Brazil's largest city, this weekend. Federal police officers have been on strike for more than seven weeks, disrupting air traffic and slowing the entrance of imports into Brazil.

Pressure

Lula is under growing pressure from his core supporters to ease spending cuts, push down interest rates faster and halt debt payments. The president, a former union leader who led workers' marches across the country in the 1970's and the 1980's, will likely stand by his spending-reduction policies at the risk of becoming more unpopular, said Alexandre Barros of Brasilia-based political risk consultants Early Warning.

``Brazil is a very poor country and doesn't have money to do it all,'' Barros said in a telephone interview. ``The government, though, has to choose priorities -- the argument that there's no money can be relative.''

A group of about 70 Indians halted a lower house plenary session today and demanded they meet with Lula to discuss the federal government's policy for Indian reservations, Agencia Globo reported. Brazilians celebrate the Day of the Indian across the country.

The Rondonia conflict is the second this year involving Indians, who backed Lula in the 2002 presidential election on hopes he would improve living standards and protect their rights. In January, about 4,000 Macuxis, Uapixanas and Ingaricos aborigines blocked road access to the northwestern state of Acre for two weeks, prompting gasoline and food supplies to dwindle.

Rondonia has about 1.5 million inhabitants, of which 8,000 are Indians. There are about 360,000 Indians in Brazil, out of its total population of 177 million people.

To contact the reporter on this story: Guillermo Parra-Bernal in Brasilia at gparra@bloomberg.net

Last Updated: April 19, 2004 15:36 EDT