Two soldiers were killed and 14 were wounded as Philippine troopers chanced upon Abu Sayyaf leaders and their hostages who were washing in a river near a jungle village in Basilan, an island near Zamboanga City yesterday morning.

In Manila, Armed Forces spokesman Brig-Gen Edilberto Adan confirmed the number of casualties, adding one of them was a junior officer. But sources in Basilan claimed a total of 10 soldiers were killed. They could not say how many Abu Sayyaf perished in their first encounter.

"The soldiers raided and opened fire on the Abu Sayyaf and the hostages bathing and swimming in the river at five in the morning," said Abu Sayyaf spokesman Abu Sabaya in a satellite phone call from Basilan to radio station dxRZ.

"They thought the hostages were our companions. Two hostages were hit by bullets," said Sabaya. He did not identify them. It was the first time the military had come across the hostage takers, in a river at Sampinip town, a 50 km stretch of thick forest near Mount Sinangkapan in the heart of Basilan, a known stronghold of Abu Sayyaf leader Khadaffy Janjalani.

Sabaya reiterated a threat to kill the 20 hostages if the military offensive continues. "Later, after our meeting, maybe we can start the execution," Sabaya said. "We want to say that we have a total of 30 hostages now. We seized fishermen on our way to Basilan from Cagayan de Tawi-Tawi," Sabaya said.

Meanwhile, President Gloria Arroyo assigned a military intermediary to negotiate with the Abu Sayyaf, said spokesman Rigoberto Tiglao. Using Sabaya's satellite phone, Filipino hostage Teresa Ganzon, wife of former transportation undersecretary Francis Guanzon, appealed to the government to start negotiating and not use military might against the Abu Sayyaf.