Sri Lanka army say kill 2 rebels, ethnic fears rise

COLOMBO, Apr 24 (Reuters) Sri Lankan troops shot dead two suspected Tamil Tiger rebels as they tried to set an ambush on Monday, while the suspected rebel killing of six Sinhalese farmers the previous day raised fears of more ethnic riots.

Some 100 people have died in just over two weeks after a series of suspected Tamil Tiger ambushes on the military were followed by attacks on Tamil civilians.

Both sides say they are still working towards talks that were scheduled for last week in Switzerland, but are now indefinitely postponed. But diplomats say the peace process seems deadlocked and some fear a return to the island's two-decade civil war.

In eastern Sri Lanka, two suspected rebels setting up a fragmentation mine ambush were disturbed by troops, the army said.

One soldier was wounded and both Tigers killed. An explosion in the northern town of Jaffna hurt no one.

An army spokesman said troops had increased their presence around the village where six farmers were shot dead late on Sunday, in the northeastern district of Trincomalee.

The Liberation Tigers of Tamil Eelam (LTTE), whose campaign for a Tamil homeland has killed more than 64,000 people on both sides, accuse the almost exclusively Sinhalese army of ''ethnic cleansing'' in the island's northeast, as well as increasingly frequent murders of Tamil civilians.

There is no doubt deaths are occurring, but analysts say it is the Tigers who are deliberately provoking confrontation to pressure the government in the knowledge that deeper ethnic divisions will drive more Tamils to their side.

CREATING A BACKLASH ''They want to say to the Tamils, we are your protectors,'' said Jehan Perera, national director for think-tank the National Peace Council. ''And they want to create a Sinhalese backlash that will ultimately help them.'' In Trincomalee district, some Tamil villages are already completely abandoned. Tamil civilians load their belongings on to bullock carts, fleeing to schools or into LTTE territory where they say they feel safer.

But the diplomatic process of bringing the two sides to talks remains deadlocked over the much smaller issue of arranging the transport of eastern rebel leaders to a pre-talks meeting in their de facto capital, Kilinochchi.

The Tigers want a military helicopter to transport their leaders, the government has offered first a ship, then a small civilian helicopter, and now a larger civilian helicopter.

Diplomats say neither side has been flexible enough.

Analysts say the Tigers are frustrated by the government failing to take any action promised at talks in February to stop ''armed groups'' operating in its territory.

That was seen as a reference to renegade ex-rebels led by former LTTE eastern commander Karuna Amman. The army denies supporting him.

With war fears rising, the government is seen as unlikely to take any action against a group that could be a useful ally against the Tigers in the east.

''My guess is that the LTTE are not keen on coming to talks which do not deal with their main concern, which is getting Karuna disarmed,'' said National Peace Council's Perera.

REUTERS CH KN1353