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COLOMBO (Reuters) - Suspected Tamil Tiger rebels sank a Chinese trawler and 18 crew members were missing and presumed dead, Sri Lankan military officials said on Friday.

News of Thursday's attack off the island republic's northeast coast emerged as government and rebel negotiators were wrapping up a sixth round of peace talks in Japan aimed at ending their 19-year civil war over a separate state for minority Tamils.

The Liberation Tigers of Tamil Eelam (LTTE) denied involvement, after initial reports that the rebels had apparently mistaken the boat for a Sri Lankan navy vessel. The trawler was Sri Lankan-registered with Chinese crew, and was flying Sri Lankan flags.

"The LTTE had informed the SLMM (Sri Lanka Monitoring Mission) that none of their gunboats were in the area... The LTTE had also informed the SLMM that they were not involved in the incident in any way," the pro-rebel Tamilnet Web site reported.

The SLMM is comprised of Nordic officials monitoring the truce between the rebels and the government.

The fishing company whose vessel was attacked said there were 27 people on board the trawler and nine were rescued by a second Chinese fishing boat. The navy said of the dead, 15 were Chinese nationals and two were Sri Lankan.

"We are carrying out a search and rescue operation, but we believe those not rescued yet have been killed," navy spokesman Jayantha Perera said.

Local media reports had said the rebels were planning an attack in retaliation for a clash this month in which the navy sank a rebel ship it suspected of carrying weapons, killing all 11 people on board.

That clash threw into question peace talks that began after a Norwegian-brokered truce was agreed in February last year, but the two sides met as scheduled for talks in Japan this week.

The SLMM truce monitors could not verify whether the Tamil Tigers were involved in Thursday's attack, but survivors they interviewed said they were attacked at night with machinegun fire by several fast-moving boats.

"Some raised their hands to surrender, but the firing continued so they jumped into the sea. The injured have gunshot wounds," said Teitur Torkelsson, the spokesman for the monitors.

Local media sources said the trawlers were attacked with rocket-propelled grenades small-arms fire.

They said because the attack took place before dawn on Thursday, it was unlikely the attackers could make out the identity of those on board.