Leaders of some 40 peasant and grassroots organizations on Tuesday urged Guatemalan President Otto Perez Molina to lift the state of siege imposed last week on the indigenous community of Santa Cruz Barillas after disturbances that left one person dead.

The groups also requested the release of 17 people arrested in connection with the unrest.

The petitions were included in an open letter to the president from the Maya Waqib Kej National Coordination and Convergence.

Carmen Reina, a researcher associated with the Coordination, told reporters in the capital that the trouble began with the murder of community leader Andres Francisco Miguel by security guards working for Hidro Santa Cruz, the company building a hydroelectric dam in Santa Cruz Barillas.

Two other men accompanying Miguel were wounded in the ambush, according to Reina, who said the reason for residents' assault on the town's army garrison was the suspicion that the security guards were hiding there.

Hidro Santa Cruz, a subsidiary of Spain's Hidralia Energia S.A., ran ads on Guatemalan television to deny that its employees were involved in the killing and to accuse community leaders of trying to "confuse" area residents into opposing the Cambalam dam.

The security guards were on vacation at the time of Miguel's murder, the company said.

"The murder of the community leader exacerbated tempers and produced a natural response of indignation," the Coordination said in its letter to Perez Molina.

Signatories said Santa Cruz Barillas residents oppose the Cambalam project because the dam will displace farmers and a site used for traditional rites and ceremonies.

In addition to ending the state of siege and freeing the 17 detainees, the letter asks the president to ensure that Miguel's killers are apprehended and to order work on the dam suspended to allow for a "genuine dialogue" on residents' concerns.

The government respects human rights, but will not tolerate challenges to the rule of law, Perez Molina said Monday during a visit to Santa Cruz Barillas.

He also said the state of siege - initially decreed for 30 days - will be gradually eased as order is restored in the town.