The group of about 40, including masked women strapped with explosives, burst into the theatre on Wednesday evening firing shots in the air and shouting "Stop the war in Chechnya". They demanded Russia pull its troops out of their Muslim homeland.

The spectacular attack faced Vladimir Putin, who called off a trip to Germany and Portugal to tackle the crisis, with his sternest test since becoming president more than two years ago.

An official said the group described themselves as a suicide death squad, or "smertniki", and a loud blast from the direction of the theatre shortly after 0500 GMT set nerves jangling.

There was no immediate reports to suggest security forces had begun to storm the building.

One hostage, reached on her mobile telephone inside the theatre, said the rebels had fastened explosives in passageways, on seats and even to hostages themselves.

"A huge amount of explosives have been laid through the place," child heart specialist Maria Shkolnikova told Reuters.

The Chechen news website www.kavkaz.org carried what it said was a statement by the attackers' commander, Movsar Barayev: "There's more than a thousand people here. No one will get out of here alive and they'll die with us if there's any attempt to storm the building," the website quoted him saying.

He called on Putin to stop the war and pull his troops out of Chechnya if he wanted to save the hostages' lives + demands that were confirmed by Russian officials at the scene.

Some nine hours after the drama had begun, reporters nearby heard brief gunfire coming from the direction of the theatre. There was no immediate explanation for the shots. But Interfax news agency quoted an unnamed hostage in the theatre as saying some of the rebels had fired from a side door.

"They have grenades and they have guns," Moscow city police chief spokesman Valery Gribakin said.

Russia has fought on and off for more than eight years to quell a separatist revolt in the North Caucasus territory that costs lives daily among Russian troops and civilians there.

NO STORMING

As two prominent figures in Moscow's Chechen community began efforts to set up negotiations with the rebels, officials played down speculation that heavily armed security forces surrounding the building would try to take it by storm.

"Storming of the building will not be carried out at the initiative of the Russian side if the terrorists do not undertake actions to kill large numbers of hostages," Gennady Gutkov, a parliamentary security committee member said.

Local authorities closed all schools in the area as a precautionary measure and stepped up security at schools attended by children from Russia's various ethnic nationalities. Putin's decision as prime minister in October 1999 to order troops back into Chechnya helped catapult the political novice into the Kremlin. His firm handling backed by tough, public fighting-talk, made him the country's most trusted politician.

He won immediate sympathy for his plight from Washington and other Western powers with whom he has grown close since he threw Moscow's backing behind the global war on terrorism following last year's September 11 attacks in the United States.

Western criticism of Moscow's hard line in Chechnya + including widespread allegations of human rights abuses + has been muted since September 11. The White House condemned the latest hostage seizure and offered help if needed.

"There are no causes or national aspirations that justify the taking of innocent hostages," White House spokesman Sean McCormack said. "We condemn terrorism in all its forms."

Several shooting incidents were reported in different parts of the five-storey theatre after the gang burst in during the second act of the Russian musical "Nord-Ost" (North-East).

Hostage Shkolnikova said there had been no casualties when the rebels stormed into the theatre, a featureless modern building known as the former House of Culture.

The group released up to 20 children immediately from among the audience as well as some Muslims and batches of hostages were released at regular intervals throughout the night. Police said 400-700 remained hostage, including several foreigners.

CRISIS MEETING

Putin called in senior security chiefs and Prime Minister Mikhail Kasyanov for crisis talks in the Kremlin and called off a trip on Thursday that would have taken him to Portugal via talks in Berlin with German Chancellor Gerhard Schroeder.

He is due in Mexico at the weekend for an Asia-Pacific summit that should also take in talks with US President George W. Bush on Iraq and North Korea.

Early on Thursday, officials reported varying degrees of success for the two negotiators + Aslanbek Aslakhanov, the deputy who represents Chechnya in the State Duma lower house of parliament, and Ruslan Khasbulatov, a former parliament speaker.

"The rebels are refusing to have contact. When we have had contact they say their leaders are resting," said parliamentary deputy Yuli Rybakov, who is involved in handling the crisis.

An anguished hostage, speaking by mobile telephone from inside the theatre, pleaded live on NTV television for the security forces not to storm the building.

"Please to not start storming. There are a lot of explosives. Don't open fire on them. I am very scared, I ask you please do not start attacking", said Tatyana Solnyshkina.

Outside, crowds of anxious relatives waited for news.

A distraught woman in her 60s said her daughter and two grand-daughters were at the show on a school trip: "My daughter managed to speak to me on the phone, literally three words. Then they took their phones away. I just don't know what happened."

The Moscow hostage-taking incident is the most audacious Chechen attack since the first Chechen war of 1994 to 1996.

In 1995 some 120 people were killed after rebels seized a hospital in the southern Russian town of Budennovsk. In 1996 a Chechen group took more than 2,000 people hostage in a raid on the neighbouring Dagestani town of Kizlyar.

In Berlin, a Foreign Ministry spokesman said three Germans were being held. The British Foreign Office was checking on the fate of at least three Britons thought to have been at the show.

(China Daily October 24, 2002)