By Marco Aquino and Terry Wade

LIMA, June 18 (Reuters) - Peruvian police, trying to avoid violence and establish order in a rebellious province, dropped leaflets from helicopters on Wednesday urging protesters to end the week-long blockade of a top mining region.

Residents of Moquegua have occupied roads, including the main highway to Chile, and severed access to the Ilo smelter and Cuajone mine of Southern Copper Corp, Peru's largest copper miner, to demand that their province receive a bigger share of taxes paid by the company.

Police were reluctant to send in officers on the ground after they were overwhelmed by thousands of club-wielding protesters on Monday and taken hostage. A Catholic bishop helped win the release of 60 officers, many bruised and bloodied, on Tuesday.

The government is still struggling to negotiate a deal to lift the blockade and persuade striking miners to return to work as President Alan Garcia faces mounting pressure to spread the wealth from a six-year economic boom to the poor.

"Protests won't solve your problems or take care of your basic needs," the leaflets said. "Violence generates violence ... the only solution is dialogue."

The blockade has caused food and fuel shortages in neighboring Tacna, Peru's southernmost province, and forced the government to send ships with gasoline to replenish supplies.

Garcia's chief of staff, Jorge del Castillo, met with provincial leaders in the capital, Lima, to try to forge a deal on how to fairly divvy up mining tax revenues among provinces.

The protests started with 5,000 people and have grown to include 20,000 at times as Garcia, whose approval rating hovers at 35 percent, faces calls to reduce poverty swiftly.

Delays could erode support for his free-market policies at a time when left-wing parties are eyeing Peru's next presidential election in 2011. The poverty rate, while falling, remains near 40 percent.

Moquegua, more than 700 miles (1,125 km) south of Lima, blames the central government for allowing Tacna to get a greater share of taxes generated by Southern Copper.

Provincial residents say Peru's economic surge has passed them by, even as mining companies reap huge windfall profits.

A labor strike severely cut output at Southern Copper's <PCU.N> <SPC.LM> Cuajone mine in Moquegua, the company said on Wednesday, as the union announced it would indefinitely extend the walkout that started on Tuesday to demand better benefits.

The company has asked the government of Peru, the world's second-largest copper producer, to declare the strike illegal and prod workers to return to the mine.

Meanwhile, laborers in Arequipa province entered the ninth day of a strike at Peru's third-largest copper pit, Cerro Verde <CVE.LM>.

The mine's owner, Freeport-McMoRan <FCX.N>, has said production remains steady and that the government has ruled the walkout illegal, meaning laborers could lose their jobs if they fail to return to work in coming days. (Writing by Terry Wade)

AlertNet news is provided by