CHATEAUGUAY, QUEBEC, JULY 20 -- In scenes more appropriate to the Demilitarized Zone in South Korea than a working-class Montreal suburb, angry whites and heavily armed Mohawk Indians have been acting out a nightly drama of deep racial divisions near the banks of the St. Lawrence River.

The Indians blockaded southern approaches to the Mercier Bridge, the only route between Montreal Island and the south bank of the St. Lawrence, nine days ago in support of members of their tribe engaged in a standoff with police 18 miles west of Montreal. There, Mohawks took up arms to prevent the town of Oka from turning land they consider ancestral territory into part of a golf course. A policeman died in a July 11 skirmish at Oka, and police and Mohawks are still stalemated.

Here, where the Mohawks have vowed to fight to death any attempt to breach their barricade, there has been no bloodshed. Armed Indians block the highway leading to the bridge where it enters their Kahnawake Reservation, while police maintain their own lines 200 yards down the highway to the south and angry white residents gather behind the police lines.

The federal government in Ottawa began to show some flexibility today in trying to end the confrontation, saying that it will offer land concessions if the Mohawks remove bridge barricades and agree to face-to-face negotiations.

But as the likelihood of renewed fighting between the police and the Mohawks began to recede, there was no sign that anti-Indian hostility was easing among the residents of this predominantly French-speaking town of 40,000 people.

With the bridge barricade causing a long and circuitous commute north to Montreal, the residents here say that in effect -- during periods of heavy traffic -- the Indians have moved Chateauguay 90 minutes further away from the city.

Amid fears that property values on the south shore of the St. Lawrence will decline as a result, the whites have vented their rage at nightfall during the siege of the Kahnawake Reservation, shouting racial insults over the heads of a line of helmeted riot policemen, toward a crude roadblock manned by the Mohawks.

Sometimes they perform mock Indian dances, yipping and beating on a drum. Occasionally they display a sign bearing an extended middle finger, shout obscenities or taunt the Mohawks with warnings that Canadian army troops are coming to massacre them. Repeatedly, crowds of several thousand whites have hung a stuffed effigy of an Indian from a lamppost and burned it.

The Indians -- many of them members of the militant Mohawk Warriors Society and armed with AK-47 assault rifles -- respond with their own theater.

Last night, just before darkness, one Mohawk defiantly stood on a truck that was pulled across the bridge approach and tried to stare down the whites through a pair of binoculars. Later, as Indian drums pounded out a war beat, the Mohawks beamed a powerful spotlight -- intensified by a large mirror -- at the whites.

Inside the Kahnawake Reservation, which sits on the south bank of the St. Lawrence, the Mohawks have vowed that whenever the confrontation ends, they will no longer shop in Chateauguay and will take their estimated $45 million-a-year business elsewhere.

"They always smiled when they took our money, but now we're just a bunch of savages to them. We'll see what kind of tune they sing when this is over," said Billy Two Rivers, a retired professional wrestler who is chief of the Mohawk band's long house, or traditional government.

The bitterness is just as deep on the white side of the barricade.

Eddie Bachinski, a truck driver, estimated he has lost $20,000 (Canadian) in value on two houses he owns in Chateauguay and adjacent Mercier Town. Bachinski said he "never had anything against the Indians" until they closed the bridge.

"They have land claims that haven't been settled for hundreds of years," Bachinski said. "Now, whenever there's a problem, they'll close a bridge to get attention. It's time the army gave them one hour to leave and then moved in and blasted them out of there."

There are expressions of hurt and betrayal among many of the 6,000 Mohawks, some of whom said they never expected what they consider overt racism from whites with whom they have associated for years on a neighborly basis.

"I've lived here all my life, and I never expected this kind of thing. Obviously there's something there that I never saw before," said a young member of the Warrior Society.

Meeting on the besieged reservation today, tribal chiefs from across Canada voted to ask countries around the world to impose economic sanctions against the Ottawa government if it fails to address the Indians' grievances.

The chiefs of the Assembly of First Nations, Canada's highest aboriginal policy-making body, also said they will ask the United Nations to intervene and demanded that Canada's Parliament be convened immediately to consider how to end the stalemate.

The Indians also repeated their demand for immunity from prosecution..