Security and Abu Sayyaf forces clashed yesterday in southern Sulu province, leaving at least 17 gunmen and a government soldier dead, officials said.

In Manila, the presidential palace turned down offers by a rebel chief to swap their two American hostages for his brother who was arrested by authorities in Manila last year.

Officials said 11 soldiers were wounded in the fighting that started shortly before 5 am in the jungles of Talipao town.

Troops overran at least three rebel encampments after security forces stormed the hide-outs of Abu Sayyaf leaders, Galib Andang and Mujib Susukan, said Col. Roland Detabali, operations chief of the military's Southern Command. "There were radio intercepts saying that many had been killed in the Abu Sayyaf," he noted.

He added that troops recovered weapons from inside the rebel camps. Southern Command chief, Lt. Gen. Roy Cimatu, ordered troops to intensify operations against the Abu Sayyaf in the largely Muslim province of Sulu.

"It was not known if Andang, also known as Commander Robot, and Susukan were killed or wounded in the raid," Lt. Gen. Cimatu said.

The two leaders of the Sulu-based faction of the Abu Sayyaf gunmen led a raid in April last year across the border to Sipadan island resort in Sabah, Malaysia, and seized 21 mostly foreigners and brought them by boat to Sulu.

Twenty of the hostages were freed after Libyan and Malaysian negotiators reportedly paid $21 million as ransom.

The group also kidnapped dozens of foreign and local journalists covering the hostage crisis in Sulu province.

Lt. Gen. Cimatu added that the troops are checking whether Filipino Roland Ullah was with the rebel group during the encounter. Ullah is the sole remaining Sipadan hostage.

One Abu Sayyaf leader who took part in the Sipadan raid, Nadzmie Sabdullah alias Commander Global, fell into government hands on July 8.

At the same time, Lt. Gen. Cimatu noted that a firefight was also raging in the three boundaries of Lantawan, Isabela and Maluso towns in Basilan yesterday.

He said the rebel group is believed to be headed by Abu Sayyaf spokesperson, Abu Sabaya, and sub-commander Isnilon Hapilon.

"This is the main rebel force holding the 10 hostages. There have been sighting of these hostages and we believe these (hostages) included the American missionary couple," explained Lt. Gen. Cimatu who was in Basilan to oversee the operations.

No casualties have been reported in the said encounter even as two MG-520 attack helicopters continue to pound rebel positions described by Lt. Gen. Cimatu as "thickly forested".

The U.S. government has sent military advisers to the Philippines to train local forces in anti-terrorism tactics, particularly against the Abu Sayyaf. Lt. Gen. Cimatu noted that the U.S. anti-terrorist experts were not expected in Mindanao on Thursday.

In Manila, the presidential palace has rejected reported offers from Abu Sayyaf chief, Khadaffy Janjalani, to swap the American hostages, missionary couple Martin and Gracia Burnham, for his brother, Hector, who was arrested by authorities in Manila last December.