Mozambique police fired rubber bullets and teargas at demonstrators on Friday as rioting flared in the capital following two days of protests over high bread prices in which ten people were killed and hundreds wounded.

A 30 percent rise in the price of bread has caused widespread anger in one of the world's poorest countries, but the government has said it is helpless in the face of soaring global wheat prices.

Drought and fires in Russia, which had been the world's No. 3 wheat exporter, and a decision by the Russian government to extend a grain export ban until late 2011, have helped to boost benchmark U.S. wheat prices by more than 25 percent this year.

Riots in Mozambique may just be a start as drought is expected to worsen in east Africa and dry heat reduces harvests in the U.S. and Russia, investment bank Fairfax said in a research note.

On the opposite side of Africa, in Cameroon, the government is threatening to close down businesses found breaking price agreements on food staples after consumer groups warned that recent market price hikes could trigger unrest.

After initial calm in Mozambique's capital Maputo, police said protesters began looting in the city's outskirts.

Rioting has resumed on the outskirts of Maputo in Benfica and Hulene. They are trying to carry on looting. Police are firing rubber bullets and teargas to disperse them, police spokesman Arnaldo Chefo said.

Protests also broke out in the central town of Chimoio, 760 km (475 miles) north of Maputo, and at least six people were hurt after police opened fire on protesters, Portugal's Lusa news agency reported.

Two of the wounded are in serious condition, Teresa Inacio, a nurse at the Chimoio provincial hospital, told Lusa.

The number of deaths in the disturbances that broke out on Wednesday rose to 10 and the number of injuries to 443, Lusa quoted Mozambique's Health Minister Ivo Garrido as saying on Friday.

The dead included two children killed when police fired on protesters who blocked streets, set tyres alight and looted stores in the deadliest riots to hit the southern African country of 23 million since 2008.

Mozambique's Trade and Industry Minister Antonio Fernandes estimated damage at around 122 million meticais (£2.14 million) in the former Portuguese colony where 70 percent of the population lives below the poverty line.

UNDERESTIMATED ANGER

Opposition parties and human rights groups have criticised the government, saying it failed to gauge the anger that would be unleashed by the 30 percent bread price rise and increases in water and electricity tariffs.

The government underestimated the situation and can't understand or doesn't want to understand that this is a protest against the higher cost of living, Alice Mabota, head of the Mozambican League of Human Rights, told Lusa.

Although Mozambique is one of the fastest growing economies in Africa, it has never fully recovered from one of Africa's bloodiest civil wars, which ended in 1992, and it has a 54 percent unemployment rate.

Things are getting back to normal now and we can resume our normal life, Police Constable Julia Fortes said while queuing for bread in a long line in central Maputo where the situation returned to normal on Friday.

Some Mozambicans said the riots had caused serious damage to the city's social structure.

The government-imposed price rise took the cost of a bread roll -- the bread staple of Mozambicans -- to 20 U.S. cents in a country where the average worker earns around $37 a month.

Egyptians also protested over food prices in recent months, and analysts have been warning that riots could follow the jump in food prices in Africa and the Middle East.

Mozambicans say they have been hit hard by the rising price of bread and other basic goods, as world wheat prices have soared, but the government said the hikes could not be reversed.

Mozambique also depends heavily on imports from South Africa which have become more expensive as the South African currency rose. Mozambique's metical has lost around 29 percent against the dollar and 33 percent against the rand this year.

The IMF expects 7 percent GDP growth in Mozambique this year. The country's main exports are aluminium, electric power, coal and farm products, including sugar.

Price riots in Mozambique in 2008 left at least six dead.

(Additional reporting by Henrique Almeida in Luanda; Writing by Marius Bosch; Editing by Michael Roddy and David Stamp)

Mozambique