(Recasts; new throughout)

By Alexandre Caverni and Todd Benson

SAO PAULO, May 11 (Reuters) - Pope Benedict said on Friday

the Roman Catholic Church was facing a "difficult time" and

that priests must work harder to stop people abandoning it

across Latin America.

He also told Brazilian bishops gathered in Sao Paulo's main

cathedral that they must focus on helping the poor. He

criticized Brazil as a country blighted by poverty in which

many politicians and rich people cared only for themselves.

The tough talk was delivered on the third day of his visit

to the world's most populous Catholic nation, aimed at

reversing the waning influence of the Church in Latin America.

After leading a festive mass to canonize Brazil's first

saint, Pope Benedict railed against slack morals, rampant

sexual activity and abortion.

He also turned his attention to another prime concern --

the exodus of millions of people from the Catholic Church.

"Certainly the present is a difficult time for the Church,"

he told about 250 bishops seated in pews between the Cathedral

da Se's magnificent arches.

He complained that Protestant groups were aggressively

courting new members and many people were turning away from

religion altogether. "No effort should be spared in seeking out

those Catholics who have fallen away."

The millions of poor people living on the edges of cities

or the countryside need to feel the Church provides for their

needs and defends their rights, he said.

To applause from the bishops, he bemoaned the ills in

Brazilian society such as huge income inequalities and he

implicitly condemned corruption.

"There is a need to form a genuine spirit of truthfulness

and honesty among the political and commercial classes," the

80-year-old Pontiff said.

Brazilian politics have long been riddled with corruption.

The first term of President Luiz Inacio Lula da Silva, who

himself rose from a humble background and is popular with the

working class, was marred by a string of scandals.

The Pope's forthright words were likely to be welcomed by

priests working in Brazil's notorious slums, or favelas, who

had previously seen him as a conservative figure more concerned

with enforcing a hardline Church doctrine.

He is known in Latin America as the man who led the

Vatican's crackdown on the Liberation Theology movement of

leftist priests in the 1980s.

"It was a speech of support, a message of courage, with

clear points for the bishops," said theology professor Fernando

Altemeyer of Brazil's Pontificia Catholic University.

GESTURE

Earlier on Friday, Pope Benedict said a mass for hundreds

of thousands of flag-waving faithful at a military airfield to

canonize Friar Antonio Galvao, a Franciscan who lived in the

18th century and founded an order of nuns.

The canonization of the first Brazilian-born saint was an

important gesture in the Pope's mission to revitalize the

Church in Latin America, home to nearly half the world's 1.1

billion Catholics.

He hammered the theme of combating loose morals, urging

Catholics to spurn media portrayals of life that glamorize

premarital sex and undermine the traditional family.

"The world needs transparent lives, clear souls, pure minds

that refuse to be perceived as mere objects of pleasure," he

said in his sermon.

But in a country where sex outside marriage is common,

birth control is widely used, and divorce is not frowned upon,

his message has had a mixed reception.

"This pope is a little too rigid, especially when it comes

to issues like marriage," said Elisangela do Nascimento, a

33-year-old divorced housewife from Sao Paulo in the crowd.

Next on his agenda is a two-day stay at the holy shrine

city of Aparecida, where he will deliver the opening address to

a conference of Latin American and Caribbean bishops before

returning to Rome on Sunday night.

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