TAMIL Tiger rebels struck at the heart of Sri Lanka’s tourist industry yesterday with a suicide boat attack that killed at least 16 people and sparked looting in the historic southern city of Galle.

The Tigers drove five boats disguised as fishing trawlers into the harbour of the popular site in an attempted assault on the Dakshina Naval base, according to military officials.

The Sri Lankan Navy said that it destroyed three of the boats while the other two detonated at the harbour entrance, killing one sailor and 15 rebels and wounding at least 14 civilians.

But residents reported hearing gunfire for an hour and a half and the pro-rebel Tamilnet.com internet site said that two boats reached the shore and launched rocket-propelled grenade attacks on the base.

The raid cast fresh doubts over peace talks planned for next week as diplomats from Japan, Norway and the United States tried to persuade the two sides to abide by a 2002 ceasefire agreement. Hopes of salvaging the truce had already faded on Monday when the Tigers killed more than 100 people, mostly sailors, in the country’s worst ever suicide bomb attack. But yesterday’s raid signalled a dramatic change of tactics by the Tigers, who had previously conducted their two-decade long struggle for an independent homeland in the north and east of the country.

It also threatened to cripple the tourist industry in Sri Lanka’s south, which has continued to attract visitors to its beaches despite the 2004 tsunami and an upsurge in violence this year. Galle, about 70 miles south of the capital, Colombo, is one of the country’s oldest and most picturesque ports and the site of a 17th century Dutch fort that is a Unesco World Heritage Site.

The town is home to hundreds of expatriates from Asia and Europe, including about 50 Britons, and has been the focus of reconstruction efforts by aid groups since the tsunami.

Last night it was under a curfew imposed by police after the Tigers’ raid triggered looting of Tamil-owned shops by criminal gangs from the Sinhalese majority. Police in Galle, which is considered the centre of the Sinhalese heartland, fired into the air to disperse the mob.

Shocked residents watched as troops took up positions on the beachfront and police cleared homes near the fort. Smoke billowed from wrecked boats in the harbour.

“I’m scared,” said Sophie Tollenaere, a tourist from Australia who was inside the fort at the time of the attack. “We’re safe, but we’re trying to get home as soon as possible.”

The raid came a day after the American Embassy warned its citizens of possible terrorist attacks in Colombo. The Foreign and Commonwealth Office has cautioned against travel in the north and east of the country.

Until yesterday Galle was considered relatively safe. Sri Lanka’s military has used its harbour to import arms and ammunition after threats to the bigger port of Colombo, which is a container hub for South Asia. Galle had not suffered a Tiger attack since December 1997 when the rebels detonated a truck bomb near the port in an assassination attempt on the navy commander.

Analysts said the Tigers were escalating their operations to boost their negotiating position at peace talks scheduled to take place on October 28-29 in Geneva — or to force the Government to pull out. Last week the Tigers resisted a major military onslaught, killing at least 133 soldiers in two hours of fighting in one of the deadliest battles since the 2002 ceasefire.

“Neither side wants to pull out of the talks, but both want to have the upper hand when they begin,” said Paikiasothy Saravanamuttu, the executive director of the Centre for Policy Alternatives. Yesterday’s attack came a day after the Tigers — the Liberation Tigers of Tamil Eelam (LTTE) — told a visiting Japanese peace envoy, Yakushi Akashi, that they remained committed to talks.

Richard Boucher, the US Assistant Secretary of State for Central and South Asian Affairs, is due to begin a two-day visit to Sri Lanka today.

Hours after the Galle attack the military launched airstrikes on Tiger targets near the eastern city of Batticaloa. The Tigers said the raids killed one civilian and wounded two, including a ten-year-old boy, but the military denied attacking civilians.

The Tigers have been fighting since 1983 for a homeland in the northeast to protect the mainly Hindu Tamil minority from discrimination by the Sinhalese majority

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