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UPDATE 2-Brazil to accept G7 Amazon aid only if Macron withdraws 'insults'

Lisandra Paraguassu and Jamie McGeever

(Adds no comment from France, background)

BRASILIA, Aug 27 (Reuters) - Brazil President Jair Bolsonaro said on Tuesday he wants French President Emmanuel Macron to retract "insults" against him before he will countenance accepting an offer of $20 million from the Group of Seven nations to fight forest fires in the Amazon.

The two leaders have become embroiled in a deeply personal and public war of words in recent days, with Bolsonaro mocking Macron's wife on Facebook and accusing the French leader of disrespecting Brazil's sovereignty. Macron called Bolsonaro a liar, and said that Brazilian women are probably ashamed of their president.

The issue of whether or not to accept foreign money has also become a tricky one within Bolsonaro's government, with various cabinet members taking differing stances on the offer.

Initially, as the fires gained global headlines, Bolsonaro said Brazil did not have the resources to tackle the blazes. Then, in the wake of the G7 offer, his Environment Minister Ricardo Salles called the aid "welcome."

However, on Monday evening, Bolsonaro's Chief of Staff Onyx Lorenzoni said Brazil would reject the G7 offer, according to news website G1, although his office said that was his personal view.

Speaking to reporters in Brasilia on Tuesday, Bolsonaro, whose popularity has been falling domestically according to recent polls, said:

"First of all, Macron has to withdraw his insults. He called me a liar. Before we talk or accept anything from France ... he must withdraw these words then we can talk," Bolsonaro said. "First he withdraws, then offers (aid), then I will answer."

The French president's office declined to comment.

Macron made the offer of financial aid at the G7 summit in the southern French town of Biarritz on Monday after leaders had discussed the fires ravaging the world's largest tropical rainforest - often dubbed "the lungs of the world".

The number of blazes recorded across the Brazilian Amazon has risen 79% this year through Aug. 25, according to Brazil's space research agency. The fires are not limited to Brazil, with at least 10,000 square kilometers (about 3,800 square miles) burning in Bolivia, near its border with Paraguay and Brazil.

But Brazil is at the epicenter of the blazes, which Bolsonaro has blamed on environmentalists, non-government organizations and the weather. He has also said fires in the Amazon were more prevalent under previous left-wing governments.

Bolsonaro is meeting with governors of Amazonian states on Tuesday morning.

Weak rainfall is unlikely to extinguish a record number of fires raging in Brazil's Amazon anytime soon, with pockets of precipitation through Sept. 10 expected to bring only isolated relief, according to weather data and two experts. (Reporting by Lisandra Paraguassu in Brasilia, Eduardo Simoes in Sao Paulo Additional reporting by Michel Rose in Paris Writing by Jamie McGeever Editing by Daniel Flynn and Alistair Bell)