COLOMBO, Feb 9: Tamil Tigers said on Monday that snap parliamentary elections called in Sri Lanka were a "grave setback" to the already troubled peace process as the political turmoil sent the markets crashing.

President Chandrika Kumaratunga, had dissolved parliament on Saturday and called elections on April 2, nearly four years ahead of schedule. The Tamil Tigers said the action against Wickremesinghe, who was leading the bid to end the three-decade conflict, could further delay the reopening of negotiations.

"The dissolution of the Sri Lankan parliament and the call for a snap election constitutes a grave setback to the peace process," the rebels' London-based top ideologue Anton Balasingham said in a statement.

"In spite of the political turmoil and uncertainty in Colombo, our liberation organisation will rigidly observe the ceasefire regulations and maintain peace," he said.

Ms Kumaratunga took over the portfolios of defence, interior and information and the prime minister said he could no longer take responsibility for maintaining the truce with the Tigers.

Ten days later, peace broker Norway suspended its role saying there was no clarity as to who was in charge in Colombo. The Tigers agreed to a ceasefire with the government of Wickremesinghe in February 2002 and the two sides held six rounds of talks.

The dialogue has been deadlocked since April 2003, but the rebels agreed to resume negotiations in November after unveiling their first peace plan to end the ethnic bloodshed that has claimed more than 60,000 lives.

Diplomats here said the political tug-of-war had put at risk the 4.5 billion dollars in foreign aid pledged in June to help rebuild Sri Lanka and support the peace process.

"Since the decision to call for elections might further delay the resumption of the peace talks, we call upon the international community to take immediate measures to assist the (minority) Tamil people faced with urgent humanitarian needs," Balasingham said.

The president and the prime minister, who are both members of the majority Sinhalese community, were elected separately and belong to rival parties.

"The irrational power struggle and the lack of consensus among the Sinhala ruling elite on the resolution of the ethnic conflict have plunged the entire country into serious political instability and endangers the prospects of peace and security of the Tamil people," Balasingham said.

G.L. Peiris, a spokesman for Wickremesinghe's caretaker government, said the country's economic prospects and the ceasefire were at risk following the sacking of the parliament.

"It is unprecedented in the history of democracy for a president to sack a government that commands a majority of the house," Peiris told reporters. Ms Kumaratunga had given a written undertaking to parliament in August 2002 that she will not dissolve the assembly as long as Wickremesinghe enjoyed a majority. Peiris said Kumaratunga actions had done "incalculable damage to the economy and the people of this country." -AFP