Cotabato City, Philippines - An unmanned US spy plane crashed and exploded in a southern Philippine town where government troops were hunting down rogue Muslim rebels, a Catholic priest who witnessed the incident said Thursday.

The plane was flying low and smashed into a telecommunications tower Saturday in Pikit town in North Cotabato province, 960 kilometres south of Manila, Father Eduardo Vazquez said.

"It crashed into the tower at the town proper, and it exploded like a grenade," he said. "The police and the military do not want to talk about it, but many people saw the spy plane."

Vazquez said police immediately recovered the wreckage and turned it over to the military.

Manila - Philippine shares dropped by 4.63 per cent on Thursday as scared investors sold their stocks amid unabated decline in the Wall Street.

Manila - The United States Thursday pledged 40 million dollars to help save the Coral Triangle, the world's largest expanse of mangrove, coral reef and fish biodiversity, covering six nations.

US Ambassador to the Philippines Kristie Kenney made the announcement at the on-going second Coral Triangle Initiative (CTI) senior officials' meeting in Manila attended by representatives of East Timor, Indonesia, Malaysia, Papua New Guinea, the Philippines and the Solomon Islands.

The CTI seeks to protect 6 million square kilometres of ocean and coasts that has been called the "Amazon of the Seas" for its biodiversity.

Davao City, Philippines - One pro-government militiaman and one communist rebel were killed Thursday in a clash in the outskirts of a southern Philippine City, a military spokesman said.

Lieutenant Colonel Ernesto Torres said the fighting erupted before dawn when about 50 communist rebels attacked a pro-government militia outpost in Davao City, 990 kilometres south of Manila.

Torres said three other militiamen were wounded in the fighting that lasted for several hours.

"We suffered one killed in action and three others were wounded," he said. "But the rebels suffered undetermined number of casualties and they were repulsed. One of the slain rebels was recovered."

Zamboanga City, Philippines - Government troops captured two local communist rebel leaders and overran a guerrilla camp in the southern Philippines, a regional army chief said Wednesday.

Major General Jogi Leo Fojas said the two rebel commanders were captured Monday during a raid on a guerrilla redoubt in Santa Cruz town in Davao del Sur province, 990 kilometres south of Manila.

Fojas said the soldiers seized the guerrilla encampment after 30 minutes of firefight.

The two captured guerrillas were undergoing tactical interrogation in a nearby army headquarters, according to Fojas.

Cotabato City, Philippines - Four Muslim rebels, one soldier and one pro-government militiaman were killed in clashes in the southern Philippines, a regional army chief said Wednesday.

Major General Raymundo Ferrer said four Moro Islamic Liberation Front (MILF) guerrillas and one pro-government militiaman were killed Tuesday in fierce fighting in Datu Piang town in Maguindanao province, 960 kilometres south of Manila.

Ferrer said a soldier was also killed Tuesday in a clash with a separate group of MILF rebels in nearby Mamasapano town, also in Maguindanao.