Sri Lanka's navy attacked and destroyed three Tamil Tiger boats yesterday as the rebels launched their first assault on the main port of Colombo in 10 years, the defense ministry said.
A large blast aboard one boat suggested it was an explosives-packed suicide vessel, the military said.
After the three boats were spotted near a restricted zone, navy fast-attack boats sank one of the small fibreglass boats 6 nautical miles (11km) from Colombo harbor, the island's main cargo hub, and chased two others out to sea, sinking them as well, military officials reported.
"Navy foils an LTTE attack at Colombo harbour, one LTTE boat destroyed at 5:30 am," the defense ministry wrote in an initial statement on its Web site, before later reporting that the other two boats had also been sunk.
Residents reported hearing gunfire near the southern end of the port's high security zone.
"We don't know how many people were in the rebel boats, but the navy confirmed they destroyed all three which were headed towards the port," a police official said.
"We suspect they came to attack naval boats to create panic," military spokesman Brigadier Prasad Samarasinghe said.
"Given the explosion, there must have been a lot of explosives aboard. It must have been a suicide boat," he said.
"The Tigers have been losing ground in the east, so they want to [prove] something here too," he said.
Samarasinghe said doors of several cargo containers aboard a nearby merchant ship had opened apparently because of the explosion, their contents spilling onto the deck, but said the ship itself was fine.
Tamil Tigers staged a kamikaze-style seaborne attack against the southern naval port of Galle in October, killing a sailor and a civilian and damaging several naval craft.
Rebels entered the Colombo port in April 1996, damaging foreign ships with rocket-propelled grenades, but the guerrilla craft was blown out of the water by port security men before they could cause major damage.
In July 2001, the Tigers staged an even bigger attack on the island's only international airport, destroying six civilian jets on the tarmac and blowing up over a dozen military aircraft parked at the adjoining air base.
Since then, the authorities have placed all ports in the island under tight security and banned fishing nearby to prevent guerrillas mingling among fishermen to stage attacks.
Police said there was confusion yesterday because authorities had also planned security maneuvers, with many believing the firing was part of a drill.
Tight security at the port was further stepped up with the employees allowed in after a thorough search, they said.
The incident came after the military captured the main rebel bastion of Vakarai in the island's east and stepped up operations against pockets of rebel resistance in the region.
Police also raised security in the island's south on Friday fearing revenge attacks, a police official said, adding that 38 people were detained for questioning.
More than 3,800 people have been killed in the past year in escalating violence despite a ceasefire that has been in place since February 2002.
Norwegian-backed peace talks ended in failure in October.
The island's drawn-out Tamil separatist conflict, led by the LTTE, has claimed over 67,000 lives since 1983 and political attempts to resolve the conflict have ended in failure.