May 16 (Bloomberg) -- Brazilians returned to work and stores reopened after police stopped three days of attacks by criminal gangs and increased security around bus stations and metro stations in Sao Paulo.

Banks, schools and shopping centers opened on schedule and the city's main airport, which was evacuated yesterday, operated normally. Traffic into the center of town and along the main ring road flowed steadily after coming to a halt yesterday evening.

``Life is coming back to normal,'' said Pedro Galdi, an equity analyst at ABN Amro NV in Sao Paulo. ``Now, police have to close in on the gangs and improve security, our biggest weakness.''

At least 96 people have died -- most of them police officers -- since the gang attacks on police headquarters and cars began over the weekend in Brazil's financial center, Agencia Estado reported on its Web site. It was the worst wave of violence in the city's history. The police said last night riots in 73 prisons had stopped and hostages had been freed.

Leaders of the criminal organization Capital's First Command suspended attacks against the police after two days of negotiations with the state government, Folha de S. Paulo reported.

The real rose 1.1 percent to 2.1423 per dollar at 10:55 a.m. New York time from 2.1665 yesterday.

Gang Control

Sao Paulo's state government denied holding talks with leaders of the gang, who allegedly gave the order by cell phone to gang members in Sao Paulo to halt attacks, Folha said, citing people familiar with the negotiations. Prison rioting ended late yesterday, the newspaper said.

The PCC, as Sao Paulo's biggest criminal gang is called, was founded in 1993 inside a Sao Paulo prison and led by Marcos Herbas Camacho, who is serving time for bank robbery and allegedly communicates with members by mobile telephone. The gang, which has a code of conduct and controls the drug and weapons traffic in Sao Paulo, charges a membership fee of 500 reais a month and 50 reais a month for jailed members, Folha said.

The gang expanded after 1995 after it succeeded in winning transfers for its incarcerated leaders by starting prison riots, said lower house deputy Luiz Antonio Fleury Filho, who was governor of Sao Paulo state between 1991 and 1994. He said the gang's influence grew because the state government gave into its demands.

'Security Risk'

``Security risk is one factor that companies take into account when making investment decisions,'' Fleury said in an interview. ``We have several Brazilian businessmen that are now living abroad because of lack of security.''

Fleury was governor when police officers broke into the Carandiru prison in Sao Paulo on Oct. 2, 1992 to contain a riot that resulted in the death of 111 people.

``This doesn't change the vision investors have had of Brazil for the past 20 years or so that it is a relatively violent country,'' said Raphael Kassin, head of emerging markets fixed income at ABN Amro Asset Management in London, which manages about $3.5 billion in emerging-market debt. ``We need a good reaction from police and for them to calm the situation down to give investors a better impression.''

Sao Paulo's state government refused an offer from the federal government to deploy 4,000 national guardsmen to Sao Paulo, as well as army troops, Eliseu Eclair Borges, chief of Sao Paulo's military police, said in a news conference in Sao Paulo last night.

``I have an absolute conviction that the state of Sao Paulo will be able to control this situation,'' Justice Minister Marcio Thomaz Bastos told reporters in Brasilia after an emergency meeting with Lula yesterday.

`Provocation'

Nine bus companies, whose fleet of 5,100 buses account for more than a third of the city's total, halted service yesterday after attacks destroyed 51 buses. The city of Sao Paulo sent two cars with two guards each equipped with bullet proof vests, to each of city's 23 bus terminals and stationed guards on main avenues, according to the mayor's office.

``What happened in Sao Paulo was a provocation, a demonstration of organized crime's strength,'' President Luiz Inacio Lula da Silva told reporters in Brasilia last night.

Sao Paulo's banking union, the country's biggest union, said 18 branches in Sao Paulo were shut after being attacked by the criminal gangs. Banks plan to operate normally today, according to the industry chamber of commerce.

Petroleo Brasileiro SA, Brazil's state-controlled oil company, canceled a meeting with investors to discuss first- quarter earnings scheduled for today in Sao Paulo.

Smuggled Phones

Net Servicos de Comunicacao SA, Brazil's largest cable television company and also a unit of Telefonos de Mexico SA, canceled a meeting with analysts and investors scheduled for yesterday at the Sao Paulo stock exchange. The Brazil Economists Association also canceled a lecture and debate on Brazil's politics and economic growth set for last night.

Eletropaulo Metropolitana SA sent headquarters staff home early yesterday and ordered repair crews to avoid high-crime areas and not provide service if threatened.

Mobile phone service in Sao Paulo, from companies such as America Movil SA and Tim Participacoes SA, was patchy as systems were overloaded by calls yesterday.

Mobile telephone providers in Sao Paulo met with state authorities to consider ways to stop communications in the state's penitentiaries that is enabling prisoners to coordinate attacks across the city.

`Urban War'

``We understand the gravity of the situation,'' said Tim Participacoes SA, a unit of Telecom Italia Mobile SpA, in an e- mail statement to the press. ``We are in contact with other mobile-phone operators and with the Brazilian authorities to take the appropriate measures.''

Smuggled cellular phones have increased organized crime leaders' ability to plan attacks and criminal actions from prisons, Colonel Luiz Carlos dos Santos, head of the Military Police Officers Association, said in a telephone interview from Sao Paulo.

Gangs attacked police buildings since May 12 with machine guns and grenades, according Folha de S. Paulo, which for two days has published a supplement called ``Urban War.''

To contact the reporter on this story: Andrew J. Barden in Sao Paulo at barden@bloomberg.net

Last Updated: May 16, 2006 13:08 EDT