Thousands of riot police took up positions in an open-air Lima market on Friday, a day after two people were killed when vendors angry over plans to move the market went on a looting rampage.
The clashes initially broke out after police blockaded La Parada, a wholesale produce market, where the sellers normally dispose of their produce.
The vendors hurled stones and bottles at police who responded by firing tear gas rounds and charging at the crowd.
A 32-year-old man died of a bullet wound in the stomach, and a 20-year-old died after a blow to the head, hospital and health ministry officials reported.
About 5,000 police officers were deployed to the market after 500 police were attacked when they tried to block street entrances with concrete barriers in an attempt to force the traders to move to a different site, National Police chief Raul Zalazar said.
The vendors say they do not want to move to the newly-constructed market because rents are too high and customers are unwilling to travel to the new market.
More than 100 people were injured in the clashes, including 68 police officers, five of whom were hospitalised. One police officer was knocked off his horse and attacked by a mob with clubs and rocks.
Police responded with tear gas, but were forced to fire into the air to rescue their fallen colleague.
"They took advantage of a wounded police officer, half fainted, and tried to kill him off," said President Ollanta Humala. "This is shameful behaviour," he said, describing the attackers as "savages".
The mob also attacked news reporters and stole cameras, and tore into a nearby shopping centre, stripping it clean.
"There are several stores here where they have broken the chains when nobody was around after all the staff had left. They've broken the locks and then they took what they wanted. They emptied out the stores," local merchant Pedro Calderon said.
Rule of law
Local media reported that looters broke into a store in the adjacent market area of Gamarra and looted the site for nearly two hours. Looters also broke into nearby parked cars and stole parts before setting them ablaze.
"We lost everything during the looting. Since yesterday afternoon Gamarra has been closed," said Diogenes Alva, the manager of the Gamarra market.
"We've taken losses and so has the state. That's why we condemn the vandalism that took place yesterday."
Protesters later tore down the cement blocks placed at the entrance, allowing freight trucks to again roll into market.
Lima's socialist mayor, Susana Villaran, said: "The rule of law will be respected and Lima will have the wholesale market it deserves."
City officials have long wanted to relocate La Parada, which opened 50 years ago as the main wholesale market for a city of about one million people.
Today Lima has a population of more than eight million, and La Parada is overwhelmed by the demand for produce.
Authorities also say the market today is an unhealthy, dangerous site run by gangs that force merchants to pay protection money.
"There cannot be lawless territories in Lima, where chaos and the underworld are in charge," Villaran said.
The mayor blamed the violence on "lumpen, criminals" and "people with the MOVADEF", a group seen as the legal arm of the former Maoist Shining Path which was crushed in the 1990s.
Rioting broke out on Thursday soon after Peruvian electoral officials allowed a recall vote against Villaran to proceed.
Opponents say that Villaran should be booted out of office on grounds of incompetence.