"The indefinite transport blockade has been postponed for one month [as of] 25 August," a statement from the Maoists said on Tuesday.

The announcement was made amid clashes with soldiers about 60km from Kathmandu in an area known as Chhahare.

On Tuesday, at least five soldiers were killed and 24 others unaccounted for in a clash which flared as Maoist rebels attempted to extend a seven-day blockade of the capital's key supply route to China.

The rebels, who are fighting to overthrow Nepal's monarchy and control much of the countryside, set off a landmine on a highway to the Tibetan border.

Casualties

The statement issued by the rebels on Tuesday claimed 24 soldiers had been killed and a cache of weapons seized.

An army official denied the claim but said "about two dozen" soldiers jumped into the Sunkoshi river flowing down from Tibet as they tried to escape.

"We have not reached contact with them," the official said.

He said the army also saw the rebels taking away 15 bodies but could not verify if they were killed or injured.

"The army was present to try to stop the blockade from taking place," he said.

Trade route

Negotiations with student bodies
allied to the rebels are underway

Nepal each year imports some $72 million worth of goods from China, mostly manufactured products at prices affordable to the poor in the agrarian kingdom.

The rebel blockade of Kathmandu, enforced since 18 August, largely through fear rather than force, has sent food prices soaring in the city of 1.5 million people even though hundreds of trucks continue to enter and leave daily under military protection.

The blockade has seen little violence or rebel presence although Maoists gunned down a policeman at a Kathmandu cinema on Saturday and a pedestrian on Monday.

The rebels, who launched their war in 1996 and run a parallel administration in many parts of the kingdom, are pushing for peace talks that would lead to the redrafting of the constitution - a demand rejected by the government.

Repeated appeals to the Maoists to end the blockade have fallen on deaf ears and opposition politicians and industrialists have pressed the government to declare a unilateral ceasefire to restore stability.

Negotiations


In an attempt to break the impasse, the government has been in contact with pro-Maoist students, a cabinet official said Tuesday.

"We have told the students that we will come to the negotiating table with you provided you insist that your sister organisations withdraw the blockade," the official said.

Prime Minister Sher Bahadur Deuba has also discussed with his cabinet whether the government should concede to a major demand for ending the blockade - that it stops calling the rebels "terrorists", the official said. No decision had been reached, he said.

Baikuntha Pokharel, a leader of the pro-Maoist student union, confirmed the government had been in contact but said the leftists first wanted officials to apologise over the alleged killing of a colleague in custody and to release others detained, the students say are jailed.

US military "aid"

Rebels run a parallel government
in many parts of Nepal

The Maoist rebel organisation were founded by former teacher Prachanda, which means the Fierce One, and are inspired by Chinese revolutionary Mao Zedong.

The organisation became popular when it condemned the government for major corruption and called for an end to the monarchy.

Peace talks have ended on a sour note on more than one occassion, due rebel demands falling on deaf ears.

One of their demands is for the governement to stop referring to them as "terrorists", which has increased rebel fears of being victimised and arrested.

Among its allies are student organisations and other anti-monarch organisations.

The United States has called for international support to defeat the Maoists, who are strongly anti-American, and end the insurgency that has claimed some 10,000 lives since 1996.

Washington has provided almost $21 million in military assistance to the kingdom, wedged between Asian giants China and India, since 2002 when the rebellion entered a more violent phase.