Sri Lanka agrees to crunch talks with rebels

COLOMBO, Oct 4 (Reuters) Sri Lanka today agreed to hold peace talks with the Tamil Tigers in Geneva on October 28-30, amid fears the worst violence since a 2002 truce could spiral into full-blown civil war.

The Tigers yesterday committed to talks, but sporadic fighting continued today as the Air Force pounded rebel positions in the island's far north and a powerful roadside bomb was defused in the capital Colombo.

Each side accuses the other of trying to rekindle a two-decade war that has killed more than 65,000 people since 1983, and Nordic truce monitors see little will from either side to halt the violence.

''The government has agreed for unconditional talks while retaining the right to retaliate if the LTTE launch any attack,'' the government said on its official website www.news.lk.

The Liberation Tigers of Tamil Eelam (LTTE), who have fought for two decades for an independent homeland in north and east Sri Lanka, have warned they will pull out of the truce altogether if attacks by the military continue.

The Tigers yesterday proposed the end-October dates and wanted to hold the talks in Oslo. They were not immediately available for comment.

The local stock market rose 1.19 per cent today on the back of news the Tigers had agreed to talks.

But some analysts fear talks might be premature given an upsurge in fighting that has killed hundreds of civilians, troops and rebels since late July and displaced tens of thousands of people.

TALKS PREMATURE? Analysts suspect shadowy Tiger leader Velupillai Prabhakaran has agreed to talks to buy time to give his forces the chance to regroup after fierce aerial bombing, artillery and rocket fire by the security forces.

The military said Israeli-made Kfir fighter jets struck rebel targets in and around the northern Jaffna peninsula today, saying it was responding to Tiger artillery fire.

Separately, police blamed suspected Tigers for planting a primed Claymore mine near a police officers' mess in a majority Tamil neighbourhood in Colombo -- the second such find in as many months.

''A garbage collector had found the bomb and informed a nearby police post. We have defused it,'' said an official of the police trooper Special Task Force bomb disposal unit. ''It's definitely by the LTTE. It's similar to other Claymores we found in Colombo.'' Hardline Marxist allies of President Mahinda Rajapakse mustered a 5,000-strong crowd to march through Colombo to decry any devolution of power to the Tigers and to protest mediator Norway's involvement in the island's protracted peace process.

Police cordoned off streets around the Norwegian embassy and truck-mounted water cannon stood by as the protesters carried banners reading ''We must defeat the LTTE'' and ''Don't divide power''.

But protesters said they had been bussed in by the Marxist JVP party and were unsure why they were there.

''Our political party informed us to come here,'' said 48-year-old farmer Hiram Ariyadasa from north-central Sri Lanka, holding a banner that read ''Hands off Sri Lanka''.

''I don't know what it says. I don't know why I'm here,'' he added, before JVP handlers ordered journalists to stop talking to demonstrators.

REUTERS DKA BD2259