Zamboanga City, Philippines  - Two Muslim militants were killed Monday during a clash with government troops in a southern Philippine island, a navy spokesman said.

Lieutenant Colonel Edgard Arevalo said the fighting erupted before dawn when troops searching for several kidnap victims in Akbar town in Basilan province, 900 kilometres south of Manila, encountered undetermined number of Abu Sayyaf rebels, a militant group linked to the al-Qaeda terror network.

Arevalo said government troops recovered the bodies of the slain rebels, two assault rifles, five rifle grenades and a cache of ammunition left behind by the fleeing rebels.

Arevalo said there was no sign of the kidnap victims, which include three Filipino teachers and an employee of a lending firm, in the fighting area.

The victims were seized in separate incidents in Basilan and nearby Zamboanga City.

The fighting erupted as local officials in nearby Jolo island were trying to hammer out a strategy to free three staff of the International Committee of the Red Cross (ICRC) held captive by a separate group of Abu Sayyaf rebels.

According to the separatist Moro Islamic Liberation Front (MILF), the rebels were demanding up to 10 million dollars in exchange for the freedom of ICRC staff Swiss Andreas Notter, Italian Eugenio Vagni and Filipino Mary Jean Lacaba.

The rebel group, which had offered to help hunt down the kidnappers, said it received the information from an MILF source in the area.

The three hostages were seized on January 15 shortly after visiting the Sulu provincial jail on Jolo island.

In an interview with a local television station last week, Abu Sayyaf Commander Albader Parad said they seized the three ICRC staff to get the attention of the government on the plight of the country's Muslim minority.

Parad did not mention any ransom demand in the video.

The Abu Sayyaf group has been blamed for some of the worst terrorist attacks and high-profile kidnappings in the Philippines.

In 2000, the Abu Sayyaf abducted 21 European tourists and Asian workers from a Malaysian resort island and brought them to Jolo. The hostages were ransomed off for millions of dollars before they were freed months later.

The following year, a separate band of Abu Sayyaf rebels seized 17 Filipino vacationers and three American tourists from a western Philippine resort. Most of the hostages were later rescued or ransomed off, but two of the Americans were killed. (dpa)