By REUTERS

LIMA, Peru, June 4 (Reuters) — Peru's striking teachers resumed talks with a government mediator today in a sign of easing tension after worker unrest
prompted President Alejandro Toledo to declare a state of emergency.

But political analysts said Mr. Toledo would need to change course to head off more protests by workers angered that his promises of a better way of life had not
been fulfilled despite signs of economic recovery.

Officials from the teachers' union, Sutep, whose 24-day strike has been at the heart of the public unrest, met the mediator, Bishop Luis Bambarén, to discuss resolving teacher demands for a wage increase and other benefits.

Bishop Bambarén and Nilver López, Sutep's leader, said early Tuesday that they were close to an accord. But later, Mr. López said teachers were holding out on
demands that would require new laws, like an option to drop out of a private pension system.

Mr. López said in a radio interview that Sutep would most likely accept an offer of a raise of $29 a month — it had originally wanted double that — and wanted a
written pledge of doubled wages by the time Mr. Toledo is due to step down in 2006. Teachers now earn an average of $200 a month.

At least 20,000 Peruvian workers staged the biggest act of defiance yet against the state of emergency on Tuesday, rallying peacefully in Lima as they shouted for Mr. Toledo to meet demands they said would improve the standard of living in this poor nation.

By imposing a state of emergency a week ago, suspending some constitutional rights and putting troops on the streets, Mr. Toledo sought to quell strikes that
threatened the economy. But the move backfired, giving protesters, skeptical of a military with a past of human rights abuses, more resolve to defy the president,
whose popularity stands at just 15 percent after 22 rocky months in office.

Troops killed one person and wounded more than a dozen people when they fired on rock-throwing students in the southern city of Puno. In all, more than 300 were arrested last week in a score of other violent confrontations across the country.