One federal officer and two suspected members of the Zetas border drug gang died in the pre-dawn fire fight outside a bar. One of the gunmen was killed when a grenade exploded inside his vehicle as he tried to throw it at police, federal Attorney General Rafael Macedo de la Concha told a news conference.

Police arrested alleged Zetas leader Rogelio González Pizana, alias "El Kelin," who is wanted in the United States on narcotics smuggling charges and who reportedly threatened U.S. agents in Matamoros in 1999.

González Pizana was wounded as he tried to flee the scene in an armored automobile, and is being held in stable condition at an undisclosed location, Macedo de la Concha told reporters in Mexico City.

In the raid, part of Mexico's "Operation Corsario," police also seized a dozen rocket-propelled grenades and a grenade launcher, but it was unclear whether the weapon had been fired during the confrontation.

Friday's shoot-out started after a 30-man police convoy approached the Covacha bar, one of the places where authorities had a tip that members of the Zetas a vicious gang of hit men formed by deserters from an elite Mexican army unit purportedly gathered.

The suspected drug traffickers were just pulling into the cantina when the convoy arrived, but quickly tried to flee.

"The convoy detected suspects gathering at a bar, and when the suspects saw the convoy, they opened fire and tried to flee," said Public Safety Secretary Ramón Huerta. Army troops were quickly called in to back up police, who arrested 35 men and 21 women found inside and around Matamoros' Covacha bar.

HIGH POWER KILLER

Macedo de la Concha described González Pizana as an "executioner" in the pay of Osiel Cárdenas, who was arrested in 2003 on charges he headed the Gulf drug cartel, which authorities believe has its operations hub in Matamoros.

Officials say González Pizana oversaw the shipping of cocaine from Colombia, and purportedly participated in the brief 1999 detention of two U.S. Drug Enforcement Administration agents when Cárdenas' henchmen surrounded the agents' car on a Matamoros street and forced them to stop at gunpoint.

In the 1999 incident, the gunmen some wearing Mexican police uniforms kept their assault rifles trained on the DEA agents and their Mexican informant until a man identified as Cardenas emerged from the crowd. He demanded that the U.S. agents hand over the informant for execution.

"This is my territory," he was quoted as telling the agents. "You can't control it." The Americans refused to hand over the informant to certain death and eventually were allowed to drive away reportedly after telling Cárdenas it would be a bad idea to kill U.S. agents.

González Pizana was himself arrested in 2001, but managed to break out of prison purportedly with the help of guards in 2002.

MAKING A DENT

Macedo de la Concha said the raid has "considerably weakened this organization. Now we have to stop it from rebuilding itself."

The Zetas gang formed in the late 90s, when several dozen members deserted from an elite paratroops and intelligence battalion posted to fight drug traffickers in the border state of Tamaulipas. More than 100 killings and dozens of kidnappings are attributed to the deserters, whose name derives from a police radio code word for "commanders." Police are investigating why such wanted gunmen felt safe enough to gather openly at a bar, Macedo de la Concha said.

"We're looking at the records of these places," he said. "And how they felt they could gather there with impunity."