* Police, peasant farmers clash on farm in rural north-east
* President deploys troops, rules out link to leftist group
* Interior minister says police fired back at armed peasants
By Daniela Desantis
ASUNCION, June 15 (Reuters) - At least seven police officers and nine peasant farmers were killed in armed clashes on Friday during a land eviction in Paraguay, marking one of the worst such incidents in the country for two decades.
Leftist President Fernando Lugo deployed troops to support local police. He ruled out any links between the incident and the Paraguayan People's Army, a small leftist group that has staged a series of raids on rural police posts in recent years.
The peasants shot at the officers when they arrived to evict them from a privately owned farm in the Canindeuyu district, some 240 kilometers (150 miles) from the capital, and they returned fire, officials said.
"Seven police have been killed in this operation. Up until now we've seen about nine deaths among the peasant farmers who were occupying the property," Interior Minister Carlos Filizzola told reporters.
The army chief said 150 soldiers had been sent to the rural area near the Brazilian border, dominated by sprawling soy fields, cattle ranches and illegal marijuana plantations.
The roughly 2,000-hectare (4,900-acre) farm where the violence took place is owned by a local businessmen who complained that a group of about 100 families had invaded his property about three weeks ago.
Peasant rights group say the land was distributed during the 35-year dictatorship of Alfredo Stroessner, when allies of his regime were rewarded with vast tracts of prime farmland in the landlocked nation of six million people.
Conflicts over land have increased in recent decades due partly to increased soybean farming in the world's No. 4 exporter of the oilseed. Ranching has also spread into areas that used to be relatively free from large-scale agriculture.
Lugo, a former Roman Catholic bishop who spent years serving in the north of the country, suspended his agenda and called a cabinet meeting to evaluate the violence.
One of his election pledges was sweeping agrarian reform but his plans to redistribute land stalled as the state struggled to reach agreement between peasant farmers demanding specific tracts and landholders willing to sell them.
The opposition's hold on Congress has also complicated his reform agenda. (Additional reporting by Didier Cristaldo; Writing by Helen Popper; Editing by Bob Burgdorfer)