Manila  - Fighting erupted Monday between Philippine troops and Muslim militants holding captive three international Red Cross staff on a southern island, wounding the leader of the kidnappers, the military said.

The fighting erupted when the Abu Sayyaf rebels tried to break through a cordon of government soldiers in Indanan town on Jolo island, 1,000 kilometres south of Manila.

The cordon was set up to prevent the guerrillas from spiriting their hostages - Swiss Andreas Notter, Italian Eugenio Vagni and Filipino Mary Jean Lacaba - out of Jolo.

Lieutenant Colonel Edgard Arevalo, a navy spokesman, said Abu Sayyaf Commander Albader Parad was first hit by a sniper when the group tried to move out.

"The group of Parad tried to break through the deployment of security forces in the area, and a firefight was triggered," he said. "This resulted in the shooting of Parad. Members trying to rescue their leader were also fired upon."

The fighting was ongoing, said Lieutenant Nelson Allaga, a regional military chief.

A military source said the hostages, staff of the International Committee of the Red Cross, were spotted when the firefight broke out.

"The hostages were seen and were not harmed," the source said.

The hostages were kidnapped January 15 after they visited the Jolo provincial jail, where they were overseeing the implementation of a water and sanitation project. (dpa)