COLOMBO, May 2 (Reuters) Sri Lanka's Tamil Tiger rebels said they were shelled today morning by government artillery, but the army denied taking any action as violence threatened a 2002 truce and planned talks remained deadlocked.
Local police said it might instead be a clash between the Tigers and breakaway faction the Karuna group, which the rebels say is government backed. But the rebels clearly blamed the army for attacking them near the northeastern port of Trincomalee.
''It is from the Sri Lankan military,'' local Tiger political leader S Elilan told Reuters. He said one civilian was wounded. ''We retaliated and fired shells back.'' Reuters witnesses in Trincomalee town, across the harbour from Tiger territory hit by government air strikes last week, said they had heard explosions and shooting.
The rebels have threatened military retaliations if government air strikes, which followed a suicide attack last week on army headquarters in Colombo, resume. Some fear that could reignite a two-decade civil war that has killed more than 64,000.
In a separate incident, an army spokesman said suspected rebels shot and wounded a soldier in the northern town of Vavuniya.
''Day by day, the security situation is getting worse,'' said Trincomalee resident Kankasaday Thuranayagam, who lost three family members in a fragmentation mine attack on a foot patrol on Monday that killed four civilians and a sailor.
''There is too much violence happening. People are suffering too much.'' Police senior superintendent Nihal Samarakoon said the new explosions were came from Liberation Tigers of Tamil Eelam (LTTE) territory, and that he believed renegade ex-rebels led by former eastern Tiger commander Karuna Amman were involved.
''It looks like a Karuna and LTTE clash,'' he said. ''But there are no details.'' The Tigers accuse the army of using Karuna to attack them. They say they raided three of his camps in government territory early on Saturday, killing 20. The Karuna group said only five were killed in that clash.
STILL HOPING FOR TALKS The government had promised at a first round of peace talks in Switzerland in February to disarm groups in their territory, but are seen to have done nothing. That is seen to have angered the Tigers, who are then said to have launched a series of attacks on the military.
The rebels, who want a homeland for Sri Lanka's Tamil minority, deny repeated ambushes on the military. Few believe them.
Both sides say they want to attend new talks, but the Tigers say they must first meet their eastern commanders. That process has become deadlocked. Currently, the proposal on the table involves a Sri Lankan Airlines seaplane, but it's unclear if the plane will have enough seats.
''People are expecting some kind of breakthrough with the seaplane offer from the government,'' said stockbroker Prasanna Chandrasekera, assistant manager at John Keells stockbrokers. ''But people are cautious.'' The stock market rose 1.2 percent before falling back after news of the shelling to close up 0.66 percent.
''There are some proposals,'' said head of the Tiger peace secretariat S. Puleedevan. ''None have been finalised yet. There have been a lot of incidents and that makes things more difficult.'' REUTERS CH VV1950