Brazil gangsters step up attacks; buses, banks hit

SAO PAULO, Brazil, May 15 (Reuters) Gangsters stepped up their war against authorities in Brazil's Sao Paulo state, torching buses and shooting at banks, security officials said today.

Sao Paulo city, Brazil's business capital, was gripped by fear as the death toll from three nights of attacks climbed to more than 70 in the worst crime violence in recent memory.

Prisoners were also rioting in about 50 penitentiaries and detention centers and were holding hundreds of people hostage, mostly guards, officials said. The bloodshed was unleashed on Friday night by a powerful criminal gang in retaliation for the transfer of imprisoned gang members to a remote penitentiary.

The gangsters, whose weaponry includes machine guns and grenades, have launched more than 150 attacks across the state since then. Police posts have been the main target, with more than 30 policemen killed.

The federal government has offered to send in troops but so far the state government has declined. President Luiz Inacio Lula da Silva has yet to comment publicly on the situation but was due to meet ministers today to discuss it.

''We are not going to give into organised crime,'' state governor Claudio Limbo told reporters. ''I have faith in the Sao Paulo police.'' Over yesterday and early today, gangsters set fire to at least 43 buses in the city, the world's third largest with 20 million people. Several transport companies ceased operations on Monday morning, leaving commuters stranded.

At least 10 bank branches, including the major Banco do Brasil and Brads, were hit by gunfire, officials said.

Streets in the city were noticeably quiet yesterday as gangsters struck in rich and poor areas alike.

Police searched vehicles at checkpoints as people went back to work today.

Police say the violence was launched by the notorious First Command of the Capital, or PC in Portuguese, one of the most powerful of Brazil's organized crime operations, after authorities transferred several hundred prisoners to a new penitentiary 620 km from the capital.

The gangs have a organised structure in the prisons and jailed leaders often control outside operations.

Sao Paulo has long been plagued by violent crime. It is also the command and control center for drug trafficking in Latin America's largest country, which is a transit point for cocaine destined for Africa and Europe as well as Brazil's domestic market.

REUTERS SHB RK1912