Sri Lanka vows to capture water supply as mortars fly

COLOMBO, Aug 1 (Reuters) Tamil Tigers fired mortar bombs at Sri Lankan troops trying to gain control of a rebel-held waterway today, hours after one of the deadliest ambushes since a 2002 truce killed 16 people.

Military spokesman Brig. Prasad Samarasinghe said troops, locked in a battle with the Tigers yesterday that killed 12 soldiers and at least three guerrillas in the east, would seek to consolidate the area, despite rebel warnings of retaliation.

He said 15 soldiers and a civilian were killed when a suspected rebel fragmentation mine blew up an army bus in the restive eastern district of Trincomalee. But he said there had been less fighting today.

''The operation is continuing. Troops will try and consolidate the area in and around the sluice gate,'' Samarasinghe told Reuters.

Troops have had to advance through minefields to reach a waterway the government accuses the Liberation Tigers of Tamil Eelam (LTTE) of blocking to choke the flow of water to 50,000 people living on farmland in army-held territory.

The air force has conducted six consecutive days of aerial bombings on rebel positions in the east.

The two sides have also exchanged artillery fire and analysts say the truce has ruptured and a two-decade war that killed more than 65,000 people since 1983 has resumed.

The government says it remains committed to the truce, but the LTTE accuses the government of rendering it null and void.

''In reality there is no ceasefire in Trincomalee, but the paper (truce) is still valid,'' Major-General Ulf Henricsson, head of the unarmed Nordic mission that oversees the truce, told reporters late yesterday.

''I still don't believe in a full scale war ... Call it a low intensity war,'' he said.

The Colombo stock market fell 1.37 per cent yesterday, but was firmer in early trade today. Traders say the market's direction was linked to the violence.

The Tigers have pulled out of peace talks indefinitely, angry at the government's refusal to grant them a separate homeland for ethnic Tamils in the north and east, where they already run a de facto state that encompasses around 15 per cent of the island.

REUTERS MQA PM1141