Peru has declared a state of emergency in a southern Andean region where dozens of army reservists have seized a police station.
Humala (right) says Peru is selling out to foreign investors
The group, led by a retired army major, is demanding the resignation of President Alejandro Toledo.
Ten policemen have been taken hostage and seven people were injured in the incident in the town of Andahuaylas, in Apurimac region.
Mr Toledo cut short a beach holiday to hold an urgent cabinet meeting.
He has declared a 30-day state of emergency, which suspends basic constitutional rights such as freedom of assembly.
It also allows authorities to enter homes without search warrants, and puts the area under the control of the security services.
'Willing to negotiate'
As many as 150 dissidents are reported to have taken over the police station, although Prime Minister Carlos Ferrero said there were fewer than 100.
The reservists are led by retired army major Antauro Humala, who is described as an ultra-nationalist.
In a radio interview from the police station, Major Humala accused President Toledo of selling out to foreign investors.
He called for an end to inflows of capital from neighbouring Chile, a traditional Peruvian rival.
"We are not going to leave the police station until Toledo steps down, but I also am willing to negotiate," he said.
He added that his brother, Ollanta Humala - who led a military revolt against former President Alberto Fujimori in 2000 - was on his way to join the uprising.
Local people were reported to have joined demonstrations in support of the takeover.
Mr Ferrero said: "We will not allow a group of subversives to try to use violent acts to shatter Peru's democracy and its laws."
"We are going to avoid violent acts but we are obligated to restore public order and arrest subversives. And that is what we are going to do."
Mr Toledo has become deeply unpopular amid corruption allegations, with consistent approval ratings of about 11%.