Sources reported the presence of dozens of armed Algerian soldiers and two Algerian military helicopters at Bordj Mokhtar, about 10 km from the border with Mali.

The reports came hours after a negotiator hinted at a breakthrough in the talks with the 14 hostages' abductors, presumed to be an Islamist group.

"We can say that the issue of the ransom demanded by the hostage-takers has been lifted, that it is no longer a factor in their release," said a member of the Malian negotiating team, who asked not to be named.

‘Very confident’

Referring to the chief negotiator, Iyad Ag Ghali, an ethnic Tuareg, the team member said earlier: "We just spoke with him. He is very confident, and things are advancing faster than we had expected."

The negotiator warned that the fact that the ransom was no longer a factor in the talks did not necessarily mean that any had been paid, nor that the hostage takers had lifted their demands for payment.

"We, the German and Malian governments, think that we will soon reach a solution."

Juergen Chrobog, German foreign ministry secretary of state

Reports have suggested the captors were demanding a ransom of some five million euros ($5.5 million) for each person, but that Germany was unwilling to pay, fearing it would encourage copycat abductions.

Bordj Mokhtar, where the Algerian forces were sighted, is located about 150 km from the Malian town of Tessalit, from where the hostages could take a special flight if they are released.

Heat exhaustion

A total of 32 Europeans were seized in southern Algeria earlier this year. But 17 were freed in a raid by Algerian special forces in May, while one German woman, Michaela Spitzer, 46, is thought to have died from heat exhaustion.

The captors have ignored appeals to release sick and elderly hostages, at least four of whom are believed to be seriously ill.

Amari Saifi, an Algerian army renegade known as Abderrezak the "Para", has been identified this week as the head of the abductors.

He heads a faction of the Salafist Group for Preaching and Combat (GSPC), an Islamic Algerian group reportedly linked to al-Qaeda.

Germany breaks silence

In Bamako, Juergen Chrobog, the German foreign ministry's secretary of state and Berlin's point man on the crisis, said he was confident of an imminent deal to free the hostages, Germany's NTV television reported late Thursday.

"We, the German and Malian governments, think that we will soon reach a solution," NTV quoted him as saying before he caught a plane back to Germany. "I am very confident." 

In Berlin, a spokeswoman said the foreign ministry hoped the hostages would be returned safely, breaking a long diplomatic silence on the issue.

"Naturally we hope now, and he (Chrobog) emphasised that again, that those concerned will return home safe and well," the spokeswoman said, while refusing to speculate on details or a timeframe for their release.

The remarks were unusual in that officials here have maintained a strict "no comment" policy since the tourists were abducted.