(Recasts with the government cutting diesel price)

By Charles Mangwiro

MAPUTO, Feb 12 (Reuters) - Mozambique's government agreed to cut the price of diesel fuel for private minibus taxis on Tuesday to end a wave of protests over high fuel prices and the rising cost of living in the southern African state.

The booming but impoverished country has been rocked by violence that has killed six people and injured more than 100 after police clashed with crowds of demonstrators who looted shops, destroyed vehicles and burned electricity poles.

Commuters were angered by high fuel costs and a decision, later scrapped, to raise transport fares by 50 percent.

"The decision to reduce the price takes effect immediately," Transport and Communication Minister Antonio Munguambe said, after announcing the diesel price would fall to 31.0 meticais ($1.30) a litre, from 35.35.

Last week, three people were shot to death by police and more than 150 were injured. Violence erupted again late on Monday in the southern province of Gaza when protesters, some wielding machetes, seized a popular market, sealed off roads and looted shops, Radio Mozambique said on Tuesday.

Six people were seriously injured when police moved in to disperse the crowd, which the broadcaster said was linked to anger over rising transportation and other costs.

"We called them (the protesters) for a dialogue, but nobody accepted our offer, making it difficult for us to understand the real motives of the violent demonstration," Jorge Macuacua, the mayor of Chokwe, told Radio Mozambique.

Bus companies and other transport operators had announced steep price increases in response to rising fuel costs, but these were later scrapped. The price of petrol has climbed 46 percent and diesel by nearly 90 percent.

Although Mozambique's economy is expected to grow robustly in 2008 -- GDP growth is forecast at 7 percent, versus 7.5 percent in 2007 -- the bulk of its 20 million people continue to eke out a subsistence living and many are mired in poverty.

Economic growth in the former Portuguese colony has also triggered inflation that has pinched Mozambicans. The inflation rate for 2007 was 8.4 percent, higher than the government's forecast of 6.4 percent. (Editing by Michael Winfrey)

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