Sao Paulo: Authorities reportedly found the bodies of at least 13 dead inmates after quelling rebellions at dozens of prisons in and around South America's largest city, but the unprecedented crime wave that terrified Sao Paulo's 18 million residents seemed to be waning yesterday.

The discoveries of the dead inmates came after police retook control of the lockups, and Brazilian media also reported that three suspected criminals were shot dead in a Sao Paulo suburb by police after they opened fire on authorities and hurled a grenade.

The killings raised the overall reported death toll to at least 97 in the spree set off by a gang's fury at prison transfers, including 39 officers and prison guards killed since last Friday and four civilians caught in the crossfire of shootouts between police and criminals.

Bomb

A homemade bomb was also set off outside a police station in the city of Tremembe about 140 km northeast of Sao Paulo, destroying a car but causing no injuries.

Despite the fresh violence and the discovery of the inmates, Sao Paulo appeared to be returning to something like normal yesterday morning, a day after the city was paralysed by dozens of bus torchings that prompted businesses to close early in self-imposed curfews. Overall there were only a few reported attacks Monday night and yesterday, compared to 181 over the previous four days.

Bus service that keeps commerce alive in the city was fully restored after panicked drivers took Monday off over fears they might be attacked, leaving 2.9 million people scrambling to find a way to work.

But traffic was light, with many people apparently avoiding work and keeping their children at home just to make sure it was safe.

Clampdown

Through the night, heavily armed police ready to shoot first and ask questions stood guard around the city's urban sprawl as authorities announced a tight clampdown on the gangs thought responsible for the violence.

"We're at war with them, there will be more casualties, but we won't back down," state military police chief Col Elizeu Teixeira Borges said of the gangs that launched the attacks on police stations, bars and banks.

Near hastily-shuttered businesses in a blue-collar neighbourhood, a dozen officers with shotguns and pistols said they did not fear gang attacks that already killed dozens of their fellow police.

"We'll be here waiting," said a grim Officer Edvan Oliveira, his finger resting on the trigger of his shotgun. "We want them to come."

Brazilian President Luiz Inacio Lula da Silva offered to send 4,000 elite troops to restore order, but Sao Paulo state Gov Claudio Lembo said the the help wasn't needed, even as the chaos prompted the stock market to cancel late trading and a city that never sleeps was eerily quiet at the start of the work week in Brazil's financial and industrial heart.

"We are in control of the city and we will preserve this control," Lembo declared. "At this moment the army is unnecessary." By late Monday night, all 73 prison rebellions that broke out had been quelled and police claimed that the situation would soon come back to something like normal. 

The violence was triggered on Thursday by an attempt to isolate leaders of the First Capital Command gang, who control drug trafficking and many of Sao Paulo's teeming, notoriously corrupt prisons, by transferring eight of them last week to a high-security facility in a remote part of Sao Paulo state.

Officials were worried the violence could spread to Rio de Janeiro, where 40,000 police were put on high alert and extra patrols were dispatched to patrol the slums where drug gang leaders live.