Heavy shelling in north Sri Lanka after talks fail

COLOMBO, Oct 30 (Reuters) Heavy artillery fire resumed in northern Sri Lanka today hours after peace talks between the government and Tamil Tigers collapsed, triggering fears of a deepening civil war.

Residents in the army-held Jaffna peninsula said fierce shelling began before dawn, an eerie reminder of months of fighting that killed hundreds of civilians, troops and rebel fighters in the run-up to the talks in Geneva.

The abortive talks ended yesterday with both sides meeting separately with mediator Norway before failing even to agree on whether or not to meet again for talks in the future.

That was a worst-case scenario for many analysts, diplomats and residents, who now fear a resumption of late July's heavy fighting that left hundreds dead, the worst violence since a 2002 ceasefire.

The Colombo stock market, which gained ahead of the talks on hopes of a breakthrough, fell 1.2 percent today.

Officials said the talks ran aground over a central rebel demand that the government reopen a highway that crosses through rebel territory to Jaffna, which is cut off from the rest of the island by Tiger lines and where food is in desperately short supply.

The road -- nicknamed the ''Highway of Death'' because of past battles fought over it -- was closed in August because of fighting, stranding thousands of people, many of whom are still waiting to be evacuated from the peninsula by ship.

For some residents in Jaffna, the failed talks in Geneva mean only one thing: war.

''I have experienced enough violence, killings, bombings, shellings and displacements,'' said 38-year-old mother-of-two Vasantha Nallathamby, venturing out into a deserted Jaffna street as artillery and multi-barrel rocket fire roared in the distance.

''Now that the talks have failed for the eighth time, I will tell you the LTTE will not keep quiet,'' she added. ''War is inevitable.'' MORE REUTERS SAM HT1220