Manila - Muslim militants holding captive three Red Cross workers in the southern Philippines have issued new demands for the release of one hostage, an official said Monday.

Interior Secretary Ronaldo Puno said the Abu Sayyaf rebels warned they would behead one of the hostages on Jolo island, 1,000 kilometres south of Manila, on Tuesday afternoon if their new demands were not met.

Manila - Two soldiers were killed in a clash with Muslim secessionist rebels in the southern Philippines, an army spokesman said Monday.

Lieutenant Colonel Romeo Brawner said the fighting erupted Sunday when patrolling troops encountered 10 Moro Islamic Liberation Front (MILF) rebels in Alamada town in North Cotabato province, 960 kilometres south of Manila.

Brawner said government troops also lost an M-14 assault rifle to the rebels, who fled to the mountains after nearly 30 minutes of fighting.

Manila - The Philippines and Japan on Monday signed nine grant contracts worth 660,000 dollars for various education, health and agriculture projects in conflict areas in the southern region of Mindanao.

Philippine presidential peace adviser Avelino Razon and Japanese Ambassador Makoto Katsura signed the contracts for the projects under the Japan-Bangsamoro
(Muslim nation) Initiatives for Reconstruction and Development.

Manila  - More than 100,000 workers in the Philippines have been laid off or have suffered wage cuts due to the global economic crisis, a senior labour official said Monday.

Labour Undersecretary Rosalinda Baldoz said 109,529 employees of companies in the Philippines have been affected by the crisis since October last year.

Baldoz said 11,574 workers were permanently laid off, while 38,806 were temporarily laid off and 59,149 have been forced to accept wage cuts after being placed on flexible work arrangements.

Manila - A Hong Kong journalist was under fire in the Philippines on Sunday for calling the South-East Asian country a "nation of servants" in a column about disputed areas in the South China Sea.

In his March 27 column for HK Magazine, titled "The War At Home," Chip Tsao denounced the Philippines' claims to the Spratly Islands, which are also claimed in whole or in part by China, Vietnam, Taiwan, Brunei, Malaysia.

Manila  - Philippine authorities were waiting Sunday for Muslim rebels to free one of three Red Cross hostages on a southern island, after government troops were ordered to pull out from a cordon surrounding the kidnappers.

A leader of the Muslim Abu Sayyaf rebel group promised to free one of the hostages if soldiers, police and militiamen moved away from their encampment in Indanan town on Jolo island, 1,000 kilometres south of Manila.