MALLAVI, Sri Lanka, Jan. 16 (AFP) — Residents of this rebel-held town in northern Sri Lanka Wednesday commemorated a senior Tiger guerrilla killed nine years ago as they hoped for a lasting peace in the country.

The small town is home to the political headquarters of the rebel Liberation Tigers of Tamil Eelam (LTTE), which is fighting for an independent homeland in the north and east of the island.

Residents of Mallavi, 310 kilometres (190 miles) north of the capital Colombo, Wednesday set up posters and candles along the main road to mark the anniversary of the death of Kittu, a Tiger guerrilla killed in 1993 when the Indian navy intercepted his ship smuggling weapons to Sri Lanka.

This year the commemoration is particularly significant as people have renewed hope of ending the long-running conflict which has claimed more than 60,000 lives.

Both the government and the LTTE are currently observing a one-month ceasefire and the Norwegian government has been invited to facilitate peace talks.

On Tuesday the government eased an economic embargo on rebel-held areas in the north of the island, which has been in place since the late 1980s.

"People are expecting peace after suffering for over 10 years here," said Roman Catholic priest Santiago Marcus, the head of the Maria Goretti church in the nearby small town of Periya Pandivirchchan.

"Everyone is suffering and they are hoping that the peace effort will work this time."

Mallavi is in the Wanni region, which encompasses an area of over 5,000 square kilometres (2,000 square miles) in the north of Sri Lanka, most of it shrub jungle and farmland.

The region has been neglected for decades and most of the roads are little more than dirt tracks. It is also psychologically divided from Sri Lanka with the time half an hour behind Sri Lankan standard time, because the rebels did not bother to adopt a national time change ordered by the government in 1996.

The Tamil Tigers Wednesday allowed a group of journalists to enter Wanni with the first food convoys sent in by the government since the economic embargo was lifted the day before.

Although Wanni is held by the Tigers, the region is supplied by the government and food convoys are escorted by the International Committee of the Red Cross, which helps trucks and civilians cross the frontlines.

At the only crossing point for civilians at Piramanalankulam, south of here, men, women and children are now allowed to go through five times a week as opposed to only two days a week before the embargo was lifted.

The check point resembles an international frontier post. All those going back and forth must have prior approval similar to a visa system and troops and Tigers search the luggage of civilians at either end.

On the rebel side of the checkpoint, civilians are taxed by the Tigers. Government military officials are unhappy with the Tiger levy, but say they are hoping that the one-month truce, which has been in place since Christmas, will be turned into a permanent ceasefire.

At the Piramanalankulam check point, Sri Lankan army chief Lionel Balagalle told reporters that he hoped that the government’s latest peace bid would lead to a peaceful end to the conflict.

But both sides agree it is a Herculean task and in a possible sign of problems ahead, on Wednesday the LTTE said that it would enter into the Norwegian-backed peace talks only if the government first lifted a ban on them imposed in 1998.