At least nine people, including a police officer, have been killed in the Nova Holanda favela in Rio de Janeiro, authorities have said.
Authorities said on Tuesday the deaths occurred following a gun battle between police officers and criminals taking advantage of protests sweeping through the city to loot and steal.
Al Jazeera's correspondent Adam Raney, reporting from the favela, said he saw blood splattered on the walls of the homes of the dead.
"It's unclear if it was a gunshot that killed these suspects in these houses or if it was something more in closed quarters," he said.
He said people in the neighbourhood would not speak to him because police there were feared rather than respected.
The violence in Rio occurred as Brazil remained in the grip of fierce protests over poor governance.
Protesters in Brazil returned to the streets of low-income suburbs of Sao Paulo and Rio de Janeiro on Tuesday to demand better education, transport and health services, a day after President Dilma Rousseff proposed a wide range of actions to reform the country's political system.
Police said at least 500 people blocked streets for several hours in a peaceful protest in the districts of Capao Redondo and Campo Limpo on the outskirts of Brazil's largest city.
The protesters did not appear appeased by Rousseff's proposals, which shifted some of the burden for progress onto Brazil's unpopular Congress by calling for a referendum on reform politicians will have to approve.
The divided Congress is likely to struggle to take any quick action on such a referendum.
About 100,000 people were expected to march in the city of Belo Horizonte on Wednesday before Brazil played Uruguay in the semifinals of the ongoing Confederations Cup.
Much of the public anger is aimed at what they view as wasteful expenditure to host sporting events such as the Confederations Cup.
City officials have declared a holiday in Belo Horizonte, and authorities said they were expecting confrontations with demonstrators.