S Lanka Tigers say shelled on last day of talks

GENEVA, Feb 23 (Reuters) Talks between Sri Lanka's government and Tamil Tiger rebels aimed at averting a new civil war entered their final day today, with the rebels accusing the army of firing artillery at them.

The army denied shelling rebel lines. ''It is a deliberate campaign against the army,'' said military spokesman Brigadier Prasad Samarasinghe.

''We are professional. We would not fire shells at a sensitive time like this. We have not fired artillery or mortars at them for four years now.'' The talks in Switzerland are seenas key to salvaging a battered 2002 truce.

The island's Tamil-dominated north and east has largely been calm since January. 25 when the two sides agreed to meet, but if the talks collapse, many fear the ceasefire will fail and the island will return to a two-decade war that has killed more than 64,000.

The Liberation Tigers of Tamil Eelam said the army fired a single shell that landed just inside their territory in the far north today. They said no one was hurt.

The Tigers also said one of their positions in the east came under army attack yesterday, shortly before the two-day talks began.

Diplomats said the talks, at a chateau outside Geneva, would be a success if the government and rebels simply agreed to meet again, and perhaps outlined some confidence-building measures such as opening new border crossings.

The government and LTTE delegations in Switzerland were tight-lipped, but officials back in Sri Lanka were hopeful.

''The government was satisfied about yesterday's discussion with the LTTE. Yesterday's discussion was good and we hope the same results will come out today,'' Media Minister Anura Priayadharshana Yapa told reporters after a cabinet briefing.

DISINFORMATION AND DISTRUST Both sides accuse each other of violating the fragile truce, with some 200 people killed in December and January. The army said they suspected the Tigers of killing a Muslim man in the island's east late yesterday, where recent violence has worsened relations between Tamil and Muslim communities.

They differ on what needs to be done. The government wants to strengthen conditions of the ceasefire, but the rebels say Colombo must crack down on paramilitary groups, particularly one led by renegade Tamil rebel leader Colonel Karuna.

A Karuna aide told Reuters that the group had killed a Tiger fighter yesterday, but said they had fired in self-defence.

Government delegation leader and Health Minister Nimal Siripala de Silva told the Geneva talks the ceasefire needed revamping because the Tigers were using it to re-arm.

Despite the divergent positions, investors in Sri Lanka took heart today from the fact that talks had not fallen apart, and the Colombo stock exchange -- which has seen volatile trade in recent months -- rose a provisional 0.69 percent.

The Tigers want a separate homeland for minority Tamils in north and east Sri Lanka, where they run a de-facto state. They say four years of peace have brought them little, and threaten to resume their armed struggle unless given wide autonomy.

President Mahinda Rajapakse has ruled out a separate Tamil homeland -- a stance the rebels branded as childish. But, in what was seen as a conciliatory gesture, he has vowed to bring armed groups under control.

Norwegian envoy Erik Solheim, who brokered the meeting, admitted suspicion ran deep. ''Confidence can only increase, but it starts at a low level,'' he told reporters.

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