(Adds governor denial, leftist quote)
OAXACA, Mexico, June 14 (Reuters) - Thousands of Mexican police firing tear gas fought a running battle with striking teachers in a southern city on Wednesday in the latest violence between protesters and security forces before July elections.
Backed up by a helicopter clattering overhead, police on foot briefly dislodged teachers from the main square in the city of Oaxaca where they had been camped for three weeks demanding higher wages.
Witnesses and press reports said shots were fired during clashes in downtown streets. One policeman was shot in the leg before the teachers retook the square, popular with tourists visiting the picturesque city.
State Gov. Ulises Ruiz denied a report by the teachers' union that police had killed three or four people and then taken away the bodies.
"They should tell us where they are because no policeman knows anything about this and no hospital has it registered. I think this is another lie," he told a radio station.
The incident, and others, have fanned tension in the run-up to the July 2 presidential vote, a close battle between leftist Andres Manuel Lopez Obrador and conservative Felipe Calderon.
Oaxaca is the highland capital of the southern state of the same name which is run by the Institutional Revolutionary Party, running third in the presidential race.
The 40,000 teachers vowed to continue the strike.
By midday on Wednesday, downtown Oaxaca was a ghost town other than the teachers in the square, with shops shuttered and residents holed up inside their homes.
The teachers have threatened to disrupt voting in Oaxaca for the presidential election. This week they blocked employee access to the state office of the Federal Electoral Institute.
LEFTIST URGES DIALOGUE
Lopez Obrador, often accused by conservatives of being a populist rabble rouser, called for dialogue.
"It's best to avoid conflict, like in medicine it's best to use preventive medicine," he said in the border city of Tijuana. "Yes to dialogue, yes to agreement, yes to negotiation," he told a rally.
In May, police put down riots in San Salvador de Atenco, a town near Mexico City. Demonstrators, opposed to efforts to evict illegal flower vendors, had attacked and abducted police officers. Two protesters died in the crackdown.
Two steel workers were killed in April in battles with police sent in to break up a strike, part of a long and bitter work stoppage by miners and metal workers nationwide.
President Vicente Fox's spokesman Ruben Aguilar said the upheaval in Oaxaca, like the previous trouble, was not a sign of instability around the presidential vote.
"In no way does the government consider them hot spots or insoluble problems, much less do they put at risk the electoral process," he told reporters.
Enrique Rueda Pacheco, head of the teachers' union, told local radio: "We must resist, we are used to ... years of struggle and to the repressive government."
(Additional reporting by Lorraine Orlandi and Martha Villela)
Miles de policías estatales desalojaron con gases lacrimógenos y helicópteros el centro histórico de la ciudad mexicana de Oaxaca, ocupado hace varias semanas por profesores del estado homónimo en demanda de mayores prestaciones. Un enfrentamiento que duró varias horas el miércoles (14) dejó como saldo dos profesores y un niño muertos.

Los profesores, agrupados bajo la Sección XXII del Sindicato Nacional de Trabajadores de la Educación (SNTE) demandan desde hace varias semanas al gobierno estatal y federal la rezonificación (cambio de salario) de todos los profesores del estado de Oaxaca, uno de los estados más pobres de México.

El gobernador de Oaxaca, Ulises Ruiz Ortiz, quien es miembro del Partido Revolucionario Institucional, desmintió un informe del sindicato de profesores que afirma que los policías habían dado muerte a tres o cuatro personas y luego se llevaron los cuerpos. ''"Deberían decirnos dónde están, porque ningún policía sabe nada de esto y ningún hospital lo ha registrado. Creo que esta es otra mentira"'', señaló Ruiz.

Estos hechos se producen a pocas semanas de los comicios presidenciales. El candidato del izquierdista Partido de la Revolución Democrática, Andrés López Obrador, pidió el diálogo: ''"Es mejor evitar el conflicto, como en medicina es mejor usar la preventiva. Sí al diálogo, sí al acuerdo, sí a la negociación"''.