Sri Lanka says sinks 11 rebel boats in naval clash

COLOMBO, Sept 25 (Reuters) - Sri Lanka's navy sank 11 Tamil Tiger vessels and killed dozens of rebels in a fierce five-hour battle overnight, the military said on Monday, a fortnight after the foes agreed to resume peace talks to halt renewed civil war.

The navy believes a top Tiger naval commander was killed or injured during the clash at sea around 50 miles (80 km) north of the strategic northeastern harbour of Trincomalee -- one of the most serious naval battles since a 2002 ceasefire that now lies in tatters.

"There were 25 Sea Tiger boats sailing south. Eleven boats were sunk, and about 70 cadres were killed," said Chief Inspector of Police Percy Perera of the Centre for National Security. He said five navy sailors were wounded in the clash.

"Fourteen Tiger craft fled towards (their northeastern base at) Mullaithivu, five of those boats on tow," he added. "They were trying to bring in reinforcements and weapons."

The Liberation Tigers of Tamil Eelam denied any of their boats sank and accused the Navy of opening fire first.

"We damaged two Navy boats badly, but only three of our cadres were lost. None of our boats sank -- all returned safely to shore," said Tiger military spokeman Rasiah Ilanthiraiyan.

The incident comes days after a suspected rebel front threatened to recapture recently lost territory on the southern lip of Trincomalee harbour.

However, the Tigers deny any involvement in the distribution of leaflets warning residents to leave immediately ahead of a rebel offensive.

Thousands of Muslims driven away by fighting in August have fled their homes for the second time in as many months in the wake of the threat, and aid workers say the military is preventing thousands more from leaving the area.

REFUGEES FORCED TO GO HOME

The government has ordered families who spent weeks in emergency shelters and schools in nearby towns to return to the Mutur area, and has closed down and cleared away refugee camps that local communities said were disrupting their lives.

With sporadic fighting and shelling continuing nearby, aid workers said the resettlement was done too soon.

"The haste in resettlement was obviously to show the world that the Sri Lankan government is in control of Mutur," the rebels said on their official Web site www.ltteps.org, accusing the military of printing the warning leaflets as a ruse.

In the besieged northern Jaffna peninsula, cut off from the rest of Sri Lanka by Tiger territory, the pro-rebel students union has imposed a boycott on classes even though the military has ordered displaced families to vacate camps at schools.

But many Jaffna residents, who fled their coastal homes in the face of a rebel ultimatum and many of whom are struggling to get by on rations of rice and lentils, are scared and reluctant to send their children back to lessons anyway.

"How can you expect us to send our children to school? You can't call this normalcy," said 44-year-old plumber and electrician Patrick Selvaratnam, who sought refuge with his wife and three children at a Jaffna church before being forced to return home.

"You can hear the shelling day and night," he added. "Our children are living in fear and on one meal a day."

The Tigers and the government have both told peace broker Norway they are prepared to meet for talks after a five-month deadlock to end a new chapter of civil war that has killed hundreds of civilians, troops and rebels since late July.

However, analysts and diplomats are sceptical the talks will actually happen, and fear a war that has killed more than 65,000 people since 1983 will grind on unless the two sides address the core issues: Human rights abuses by both sides and the rebels' central demand for a separate homeland for minority Tamils in the north and east.