Kumaratunga told visiting European Union Commissioner for External Relations Benita Ferrero-Waldner Monday that she expected talks to begin soon for lasting negotiated settlement in the country.

"The President briefed her (EU Commissioner) on the current moves to establish a negotiated and lasting settlement to the conflict within the framework of Oslo Declaration (which commits both sides to a federal solution)," a statement issued from Kumaratunga's office said.

"The President said she was confident such negotiations could commence sooner rather than later," the statement said. "However, she said certain contentious issues needed to be ironed out."

"President Kumaratunga urged the European Union to impress upon the LTTE [Images] the importance of returning to the table for direct talks without procrastination," it said.

The statement came as the Defence ministry said two more rebels were killed in overnight clashes in Batticaloa district.

One each had been killed from the main LTTE and from the breakaway faction of Karuna, military officials said, adding a third man had escaped with gunshot injuries.

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