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UPDATE 1-Brazil power plant construction paralyzed by indigenous protesters

(Adds company comments)

SAO PAULO, July 17 (Reuters) - Construction of a power plant on the Teles Pires river in Brazil was paralyzed by protesters from the Munduruku tribe, a leader of the group told Reuters on Monday.

The protesters are demanding the formal demarcation of their indigenous land, and the return of burial urns that they said disappeared during the construction work, the leader said.

"The works have been completely halted ... We will remain here until our demands are met," said Valdenir Munduruku, one of the leaders of the protest group.

Construction of the São Manoel hydropower plant, located near the border of Mato Grosso and Pará states, is budgeted at 3 billion reais ($942 million).

The plant is owned by Portugal's EDP Energias do Brasil , China Three Gorges Corp and Furnas, which is controlled by Brazil's Eletrobras.

The protesters are seeking demarcation of the 178,173- hectare (440,275-acre) Sawré Muybu indigenous territory where the Munduruku people live.

Eletrobras declined to comment. The company owned by EDP Brasil and China Three Gorges that controls the plant said in a statement that it was negotiating with the tribe to try to find a solution to the conflict.

($1 = 3.18 Brazilian reais) (Reporting by Luciano Costa; Writing by Ana Mano and Tatiana Bautzer; Editing by Andrew Hay)