Peru's Humala picks ex-army officer to lead cabinet

LIMA (Reuters) - President Ollanta Humala replaced his prime minister on Saturday with a former army officer who was his instructor in the military in an unexpected cabinet shakeup that stunned Peru.

Oscar Valdes, who until now had been Humala's interior minister, will replace Salomon Lerner, a businessman who was the most powerful centrist in the government and who helped Humala shed his left-wing image to win election in June.

A government source said Humala, who was a professional soldier before he turned to politics, had asked Lerner to quit to allow him to create more "cohesion" in the ideologically diverse cabinet.

The presidential palace said all ministers in the cabinet tendered their resignations after Lerner stepped down. By law, if a prime minister quits the rest of the cabinet members must do so as well - giving the president a chance to fire them or confirm them in their posts.

Opposition lawmakers criticized Lerner's departure as "premature." They worried Humala had been pressured by leftists to purge moderates from his cabinet, or that he might assume a more authoritarian style after invoking a state of emergency last week to quash anti-mining protests.

The presidential palace did not say who else in the cabinet would be replaced.

Besides Lerner, influential centrists include Finance Minister Luis Miguel Castilla, Mines and Energy Minister Carlos Herrera, and Trade Minister Jose Luis Silva, who has pushed ahead with an ambitious free-trade agenda that Humala once criticized.

Peru's government has been shaken by protests against a $4.8 billion gold mine project proposed by U.S. firm Newmont Mining. Humala gave the military and police special powers last week to end rallies that had shut roads, schools and hospitals in the Cajamarca region.

Lerner personally negotiated with leaders of the protest for hours last weekend but he could not reach an accord, prompting the emergency measures by the president.

Humala won the presidency in June on promises to steer more social spending to rural towns to help calm social conflicts over natural resources while assuring companies their investments would be safe in Peru's surging economy.

(Reporting by Marco Aquino, Patricia Velez and Terry Wade; Editing by Bill Trott)