Michoacán Governor Lázaro Cárdenas on Saturday ordered state police troops to leave the vicinity of a steel mill where a violent clash on Thursday left two striking workers dead.

Earlier in the day, the governor accepted the resignations of two top state officials after the state´s attorney general admitted that local policemen fired their weapons during Thursday´s failed attempt to remove striking workers from the mill.

At the federal level, President Fox ordered the Interior Secretariat to take charge of negotiations, suggesting he realizes that the Labor Secretariat no longer can be part of the solution, particularly since the labor union has been calling for the resignation of Labor Secretary Francisco Javier Salazar.

Nearly 400 state policemen began retreating from the area around the Sicartsa steel mill Saturday afternoon, although over 400 Federal Preventive Police troops remain on the perimeter.

The state forces had arrived at the mill on Wednesday night after federal authorities requested assistance as they prepared to remove the strikers who have occupied the mill since April 2.

Officials said Thursday morning´s police action was to begin under cover of tear gas and that officers were armed with rubber bullets under orders to fire over the heads of the strikers.

State Attorney General Juan Antonio Magaña said Saturday that some troops were given live ammunition but were supposed to only shoot at the tires of the vehicles being used by the strikers to block access to the mill.

The two victims died as a result of gunshot wounds.

The state´s prosecutor also said they would be investigating the incident fully, determined to find out if policemen had used their weapons recklessly or if they were ordered to fire on the workers.

The two state officials who resigned were Public Safety Secretary Gabriel Mendoza and Ministerial Police Director Jaime Liera.

Magaña also expressed confidence that renewed negotiation efforts would prevent another confrontation from taking place.

Interior Secretary Carlos Abascal was leading government- sponsored mediation in an effort to resolve the dispute between Grupo Villacero - the owners of the mill - and the union.

The union went on strike after their demands that union leader Napoleón Gómez Urrutia be reinstated were rejected by the Labor Secretariat. Gómez was removed by the government in February and accused of embezzling union funds. He was replaced by a company- backed former union official who the rank-and-file refuse to recognize.

Early last week, the Labor Secretariat´s arbitration board ruled the strike illegal, precipitating Thursday´s police action.

Also Saturday, the second of the two victims of Thursday´s clash was buried in the port city of Lázaro Cárdenas where the Sicartsa mill is located.