Tuareg rebels held talks with Mali's interim president, discussing possibilities for peace and reconciliation, but tensions remained high as a homemade bomb was found in flashpoint city Kidal a week from a crucial presidential vote.

In a further sign of the difficulties involved, a Tuareg rebel leader was arrested over the abduction of six officials in northern Mali the previous day. All six were released and "doing well" on Sunday, authorities said.

The kidnappings were blamed on the National Movement for the Liberation of Azawad (MNLA), a rebel group founded to fight for independence for Mali's minority Tuareg people.

Ibrahim Ag Assaleh, one of the Tuareg delegates to the talks with interim president Dioncounda Traore said: "We talked about peace, we talked about reconciliation."

"I call on all the sons of this country...to work to find a solution to the recurring rebellions," he added after the talks in the capital Bamako.

The conciliation talks, which had not been announced, included members of the MNLA and another Tuareg group, the High Council for the Unity of Azawad (HCUA), signatories to a peace deal signed with the Malian government last month.

The talks were set to resume on Monday but they do so against a backdrop of security tensions in the Kidal region ahead of the presidential election scheduled for July 28.

The vote is considered vital to the future of Mali which is battling to restore democratic rule after an 18-month crisis that saw it suffer the back-to-back blows of a Tuareg rebellion, a military coup and the seizure of half its territory by Islamist extremists.

The MNLA took control of Kidal in February after a French-led military intervention ousted Al-Qaeda-linked fighters who had piggybacked on the Tuareg rebellion to take control of most of northern Mali then chase out their former MNLA allies and impose a brutal form of Islamic law.

The Malian authorities finally reclaimed the city, after signing the deal with the MNLA and the HCUA, on June 18 aimed at reuniting the country and clearing the way for elections.

Saturday's kidnappings came after violence between the light-skinned Tuaregs and Mali's majority black population rocked Kidal on Thursday and Friday, leaving four people dead, businesses looted and ransacked and the city's central market burned.

"It was Baye Ag Diknane, an official of the MNLA, who ordered the abduction," a Mali official said, adding that the Tuareg rebel had been arrested and was under questioning.

An African military source in Kidal confirmed the hostages' release.

The six officials had been at the town hall in Tessalit, a remote outpost some 200 kilometres (125 miles) from key northern city Kidal, to plan the distribution of identity cards to voters for the July 28 election when they were abducted.

No one has claimed the kidnapping -- including the MNLA, which was immediately blamed by officials in Kidal and in the Malian security ministry.

Kidal residents say Malian troops and UN peacekeepers have been on patrol and that calm has largely been restored.

But panic erupted Sunday morning when a homemade bomb was found in the middle of the city, witnesses said.

Residents were evacuated from the area and the device was disarmed, a local official told AFP.

Observers have increasingly cast doubt on whether Kidal will be ready for the election.

One of the 28 presidential candidates, Tiebile Drame, dropped out of the race on Wednesday saying the country was not prepared, especially Kidal.

The favourites in the race are Ibrahim Boubacar Keita, a former prime minister, and Soumaila Cisse, an ex-cabinet member and former top West African official.

Cisse told a campaign rally Saturday in Bamako that he was "deeply concerned over the risk of widespread fraud" and had alerted the UN.

The leader of France's military operation in Mali, General Gregoire de Saint-Quentin, said Mali was not "completely stabilised" despite the French-led intervention's military success against the Islamist extremists.

"Two-thirds of the country spent a year under the control of terrorists who tore down all administrative and security structures," the general told French weekly Journal du Dimanche.

"The Malian army was defeated and its equipment destroyed. It takes time to rebuild all that in such a big country."

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