QUITO, Ecuador—President Lenín Moreno agreed to scrap a decree to eliminate fuel subsidies and indigenous groups called an end to strikes and protests after almost two weeks of street clashes triggered by Ecuador’s austerity measures.

The announcement of the deal late Sunday sparked cheers and dancing among thousands of demonstrators who had set up roadblocks made of burning tires and smoldering trees, paralyzing the capital of this small, oil-exporting Andean nation for days.

“We...