PERUVIAN rebels holding 400 hostages at the Japanese ambassador's residence in Lima released 38 captives last night, said police and the Red Cross.
Live television showed the group walking out escorted by Red Cross officials. One of them was being pushed in a wheelchair.
The rebels said they would release another "significant" number if the Peruvian government allowed them to talk to their jailed comrades. In a statement read to reporters by a freed captive, the guerrillas also reiterated their desire for a peaceful, negotiated end to the crisis.
The release was the first from the besieged residence since a smaller number was set free on Thursday.
Earlier the rebels set a deadline of today for their demands to be met as officials tried to patch a rift between Peru and Japan over how to handle the deepening crisis.
But a Red Cross official in contact with the guerrillas, Mr Steve Anderson, said he was unaware of any deadline.
A message in Japanese held up to a window of the residence of the Japanese ambassador and translated by a Japanese reporter said authorities had until today to release some 400 jailed rebels of the Tupac Amaru Revolutionary Movement (MRTA).
The message did not give a specific time today and did not speak of consequences.
The Marxist rebels, said to number about 20, had previously threatened to kill the hostages if their demands were not met.
A top Japanese government official in Tokyo said yesterday there was a "wide gap" between the two countries on how to end the crisis. Analysts said Japan, which has a record of acceding to the demands of hostage-takers, was opposed to Peru's hardline stance.
Spokesmen at the Peruvian Foreign Ministry and the Japanese embassy in Lima would not confirm the disagreement. Peru early yesterday promised not to give in to rebel demands after a meeting between President Fujimori and Japan's Foreign Minister, Mr Vukihiko Ikeda.
The US ambassador, Mr Dennis Jett, who also met Mr Ikeda, said Washington agreed with Tokyo that the safety of the hostages was the top priority.
The Peruvian government, during a cabinet meeting early yesterday "totally rejected" the demand of the MRTA that its leader Victor Polay Campos, and other comrades be released from jail, a local radio station said.
Peruvian intelligence officers have met jailed Marxist rebels including the leader and tried to persuade them to publicly condemn their comrades action, police sources said.
Security has been tightened around the Japanese residence in an elegant Lima neighbourhood where an estimated 900 police with machine guns have cordoned off about four blocks around the compound.
Meanwhile Gen Jesus Armando Arias, who led a bloody assault on Colombia's Supreme Court to quell left-wing rebels holding 300 hostages in 1985, said that an attack was an option to end the siege in Lima.
A former president advised giving the rebels money and sending them abroad