The Sri Lankan navy said Monday it had sunk eight Tamil Tiger rebel ships loaded with troops and weapons during a five-hour sea battle of the country's east coast, killing about 70 separatists.

It was one of the largest clashes in Sri Lanka's conflict since weeks of fighting in August left hundreds dead and threatened to shatter a 2002 cease-fire agreement.

The latest fighting began late Sunday night when the navy spotted 25 rebel ships sailing south.

Navy Cmdr. D. K. P. Dassanayake told The Associated Press "more than 70 cadres are dead" and two other ships, believed to have been transporting arms and ammunition, were burning at sea.

The remaining 14 rebel boats retreated after the hostilities just off the coast of the eastern town of Pulmoddai, about 225 kilometers (140 miles) from the capital Colombo, he said.

One navy vessel was damaged, injuring five sailors, he said. But it had made it back to port.

A spokesman at the Defense Ministry's press office confirmed the attack, but had no additional details. The rebels were not immediately available for comment.

More than 100 rebels were killed in two separate sea battles earlier this month as they reportedly try to reinforce positions in the east where they lost territory to government forces.

Foreign mediators are struggling to keep alive the four-year old Norwegian-brokered cease-fire which has unraveled amid clashes that have killed at least 1,000 combatants and more than 100 civilians since July.

The Tamil rebels began fighting in 1983 for a separate homeland in the north and east for Sri Lanka's largest ethnic minority. They have suffered defeats on both fronts in the recent escalation and vowed to retake land lost to the government.

Farther down the eastern coast, thousands of Muslims were fleeing the port town of Mutur, after the distribution of leaflets warning of an imminent rebel attack.

Around 1,400 of them, including women and children, sought shelter on the nearby island of Kinniyai, while many more were prevented from leaving by authorities who said they had nothing to fear.

The exodus forced many to abandon observances of the Islamic fasting month, Ramadan, which began in Sri Lanka on Sunday.

It was the second time since August that the mostly Muslim residents of Mutur, about 230 kilometers (140 miles) east of Colombo, have fled the town. They had returned home just two weeks ago after having been driven out by fighting between government forces and Tamil Tiger rebels, which killed an unknown number of civilians.