Tigers report army ambush as S.Lanka violence soars

COLOMBO, Apr 13 (Reuters) Sri Lanka's Tamil Tiger rebels said government forces ambushed and killed two of their men today, a charge the army denied, as the body count from recent violence soared and diplomats said war might not be far away.

More than 40 people have died in the past week, 16 of them on Wednesday in two suspected rebel blasts in and near the northeastern port of Trincomalee and the ethnic riot that followed in which a majority Sinhalese mob attacked minority Tamils. It was the bloodiest day since a 2002 ceasefire.

With tensions rising fast, aid workers providing relief after the 2004 tsunami said they had suspended operations in parts of northeastern Sri Lanka. Diplomats said return to the island's two-decade civil war looked increasingly likely.

Police said at least two Tamil civilians had been killed by unknown gunmen in the northern army-held Jaffna enclave, hemmed in by rebel lines.

The Tigers blamed army-backed Tamil groups for the killings, and their Web site also accused the army and linked groups of ambushing and killing two rebels behind Tiger lines in the north and east. The military, repeatedly hit by suspected Tiger attacks this week, denied the charge.

''We do not operate in LTTE areas,'' army spokesman Brigadier Prasad Samarasinghe said. ''They are putting us under a lot of pressure and they want to provoke us but we will not be provoked.'' The Tigers also accuse the military of backing the ethnic riots that followed a suspected rebel blast in Trincomalee on Wednesday, in which a crowd mainly from the island's Sinhalese majority attacked Tamil shops and people.

''Seven people were cut and chopped and killed by the Sinhalese thugs while the military and police looked on,'' Puracethi, head of the Tamil Eelam Students Union -- a Tiger body -- told Reuters. ''The police were keen to control and suppress the Tamils.'' The army denies helping the rioters, a charge made on the official rebel Web site, and the government blames the Tigers for the bomb in a crowded market that triggered the violence.

Analysts say the Liberation Tigers of Tamil Eelam (LTTE), whose two-decade fight for an ethnic Tamil homeland has killed more than 64,000 on both sides, may use the riots to pull out of the meeting.

PROVOKING RETALIATION, WAR ''One thing that is certain is that the talks are out,'' said Jane's Defence Weekly analyst Iqbal Athas. ''The events of the past few days show the LTTE trying to provoke the military into a retaliatory strike -- and when that happens, that is when the war will resume.'' The military said there had been sporadic incidents overnight, with an army major and a soldier shot by a suspected rebel on Wednesday evening and a shooting and grenade attack in the northeast overnight that hurt no one.

The head of a Nordic-staffed mission monitoring the ceasefire was due to meet the head of the Tigers' political wing later on Thursday. The rebels are angry that the government has not disarmed other Tamil groups they say are attacking them, but deny themselves carrying out any attacks.

Few analysts believe them.

Military and rebels have different accounts of what happened in Trincomalee. The army says most of the dead civilians died in the bomb blast, while the Tamil Eelam Students Union says seven of the 14 dead were burnt and stabbed by the rioters.

A Reuters photographer said a curfew remained in force in the town, which is partly surrounded by Tiger territory. He counted 15 dead bodies including one child in the hospital, many burnt, but it was unclear how they died.

Analysts say many foreign investors were awaiting the outcome of next week's scheduled peace talks before deciding whether to put money into the 20 billion dollars economy. Tourism is also expected to be hit, and aid workers say their work will become almost impossible.

REUTERS SY SP1314