Sri Lanka fighting rages as military counts dead

COLOMBO, Oct 12 (Reuters) Sri Lanka's military today said 43 troops were killed, another 25 to 30 were missing and 224 were wounded in a fierce battle in the island's far north a day earlier.

Artillery duels continued to rage and residents in the army-held northern Jaffna peninsula, cut off from the rest of the island by rebel lines, heard fighter jets fly towards Tiger territory.

Explosions were heard in the distance.

The Red Cross said it was trying to arrange the handover of the bodies of 20 troops. The bloody corpses were shown in graphic detail on pro-rebel Web site www.tamilnet.com.

The Tigers said 10 of their fighters were killed but the military estimates they killed more than 150 rebels.

The Tigers say they have recovered the corpses of 75 troops from inside their territory after what they say was a military offensive.

The security forces deny crossing into rebel territory, but have blocked truce monitors from inspecting the area.

''The battle happened in no-man's land, between our forward defence lines and theirs,'' said military spokesman rasad Samarasinghe. ''They don't have 75 bodies.'' ''Some people are missing -- about 25-30 troops. They must be having those bodies.'' He said the foes continued to exchange artillery and mortar fire on Thursday morning, but said there was no close-quarter fighting.

The Tigers and the military each accuse the other of provoking the fighting, which political analysts and the international community fear could derail peace talks due in Geneva on Oct.ober28-29.

The fighting, some of the worst since a tattered 2002 truce, came after the Tigers warned any further incursions by the military could prompt a full-blown return to a war that has killed more than 65,000 people since 1983, including hundreds since the ceasefire.

The United States was alarmed by the latest rash of fighting.

''The United States welcomes the agreement between the Sri Lankan Government and the Liberation Tigers of Tamil Eelam to return to talks ... but is deeply concerned that ongoing violence in Sri Lanka is putting the agreement at risk,'' State Department spokesman Sean McCormack said in a statement issued in Washington.

''We call on both sides to cease hostilities immediately and foster an environment that is conducive to holding productive discussions in Geneva,'' he added.

''We also urge both sides to ensure that non-government entities involved in humanitarian relief efforts are provided access to conflict-affected areas.'' Some diplomats suspect the Tigers have only agreed to talks to buy time to regroup after a series of military defeats, while senior members of the security forces say they want to kill as many Tigers as possible before any talks start.

REUTERS DKB KN1037