June 8, 2011 / 6:02 PM / 7 years ago

UPDATE 1-Peru resource protests resume after Humala win

* Social conflicts plague investment climate

* Resolving conflicts key challenge for Humala

* Stocks extend recovery after rout (Updates with markets continue to recover)

By Patricia Velez and Caroline Stauffer

LIMA, June 8 (Reuters) - Peruvian Indians demanding a halt to all mining in the southern region of Puno resumed protests on Wednesday, a reminder that social conflicts over resources will vex leftist President-elect Ollanta Humala.

The protesters, most of them Aymara Indians who say they are concerned about pollution, had lifted their blockade in the days before Peru’s election on Sunday to allow voters to reach polling stations.

But on Wednesday they started to retake control of highways by setting up blockades of boulders to draw attention to their demands. Peru is a leading global exporter of copper, zinc, gold, silver and tin, with vast untapped resources in the Andes.

Humala, who is well-liked in the poor provinces, has said he will work to end social conflicts over natural resource projects that have plagued companies. He takes office on July 28.

More than 200 rural towns in Peru have organized to stop the building of new mines, oil wells and hydroelectric dams that residents say will cause pollution or fail to bring them direct economic benefits.

“We are going to fundamentally focus on social programs,” Humala told Reuters on Tuesday. [ID:nN07175230]

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Full campaign coverage [ID:nVOTE2PE]

Key political risks to watch in Peru [ID:nRISKPE]

FACTBOX-Humala’s economic team [ID:nN06300486]

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Humala has promised to ensure social programs reach poor, isolated towns to try to spread the wealth from Peru’s resource boom to the one-third of the country mired in poverty, stoking fears he will undermine an economic boom that triggered a deep sell-off following his victory.

However, markets have since recovered from the lion’s share of Monday’s 12.5 percent bourse slide as Humala seeks to reassure investors he will not follow in the footsteps of his former mentor, Venezuela’s firebrand leader Hugo Chavez, who has let inflation surge and taken over private companies.

Peru’s benchmark stock index .IGRA rose 3.5 percent on Wednesday, a day after ratings agencies said the country’s investment-grade credit was not put at risk by Ollanta’s win. The stock index also rebounded 7 percent on Tuesday.

The local sol currency PEN=PE was slightly firmer on Wednesday.

The first round of protests in Puno drove down the share prices of Canadian mining companies such as Bear Creek (BCM.V) and Rio Alto (RIO.V), although they were mostly flat on Wednesday.

Most companies in Puno are only exploring for minerals and have not started producing. The government has tried to calm protests by promising to turn a broad stretch of land in Puno into a nature reserve.

Rufino Machaca, a leader of the protests, said all concessions granted by the outgoing government of President Alan Garcia — which has lined up $40 billion in mining projects for the next decade — must be revoked.

Protesters also demand the Inambari hydroelectric project, which would be built by Brazilian companies, be canceled. (Writing by Terry Wade; Editing by Simon Gardner and Cynthia Osterman)

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