Manila - Philippine President Gloria Macapagal Arroyo on Thursday cancelled a trip to the United States later in the month amid fighting between government troops and Muslim rebels in the country's strife-torn southern region of Mindanao.

Press Secretary Jesus Dureza said Arroyo cancelled her trip to New York in time for the 63rd United Nations General Assembly to focus on local concerns.

"She decided to attend to pressing matters at home," he said. "Maybe, the president does not want to leave at at time when a new paradigm shift in the peace process in Mindanao is being set up."

On Wednesday Arroyo dissolved the government's peace panel negotiating with the Moro Islamic Liberation (MILF) following intense clashes between soldiers and the guerrillas.

Nearly 200 people have been killed and more than 500,000 displaced in the hostilities that erupted last month after the Supreme Court stopped the signing of a territorial deal between the MILF and the government.

Critics urged the Supreme Court to declare as unconstitutional the ancestral domain agreement, which would have expanded an existing Muslim autonomous region in Mindanao, alleging that it could lead to the Balkanization of the country.

Arroyo eventually scrapped the deal and government lawyers urged the Supreme Court last week not to rule on the merits of the case anymore since it was already scuttled. The lawyers also claimed that Arroyo did not read the deal. (dpa)