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By Andrew Cawthorne

MEKELE, Ethiopia, March 5 (Reuters) - A search party scouring a remote northeastern region of Ethiopia looking for five kidnapped Europeans on Monday found two shrapnel-damaged vehicles that had belonged to the group.

The team discovered the abandoned vehicles, which were riddled with holes, in the tiny village of Hamad-Ile, said a Reuters reporter at the scene.

The five foreigners, all linked to the British Embassy in Addis Ababa, were believed to have been kidnapped there last week on a trip to Afar, one of the world's most hostile environments.

"One had eight shrapnel holes in the right-hand doors. The other had a hole that looked like it had been caused by an explosion in its front passenger door," the reporter said.

A small delegation of British Foreign Office and British embassy staff travelled two days to reach the village, which means "water hole" in the Afar language.

Several British newspapers, quoting defence sources, said London had sent SAS special forces to Ethiopia to help find the Westerners, who were seized near the border with Eritrea.

They were captured along with 13 Ethiopians working as drivers and translators. Five Ethiopians were later found close to the frontier.

"If, as has been speculated, the group is being held against their will, it may be they have been the victims of mistaken identity," Bob Dewar, Britain's ambassador to Ethiopia, said in a statement.

He also urged anyone in the Afar community with information about the kidnapped group to contact the British embassy or Ethiopian authorities, who he said were leading investigations.

Asmara has denied allegations by an Ethiopian official that forces from Arat military training camp in Eritrea carried out the kidnappings.

On Sunday, Ethiopia, which has strained relations with its tiny neighbour following a 1998-2000 border war, said the identity of the kidnappers had yet to be established.

DIPLOMATIC CHANNELS

Fears for the missing travellers grew in Ethiopia's small British expatriate community as another day passed with no word of their whereabouts.

In London, the Ministry of Defence declined to comment on reports that special forces personnel were in Ethiopia and a Foreign Office spokeswoman would not say whether Britain had sent hostage negotiators to the Horn of Africa country.

But she said the Foreign Office was in constant touch with the Ethiopian government, including Prime Minister Meles Zenawi.

A spokesman for British Prime Minister Tony Blair said he was being kept fully informed on the situation. Eritrea's ambassador to Britain, Negasse Senal, told the BBC his government was "working closely" with the British government.

Afar is one of Ethiopia's poorest but most visually spectacular regions, populated mostly by roaming herders who scrape a living from sheep and goats.

The area, a barren expanse of ancient salt mines and volcanoes, was the scene of a low-level rebellion against the government in the 1990s by separatists calling for an Afar state on territory straddling Ethiopia, Eritrea and Djibouti. (Additional reporting by Andrew Heavens and Tsegaye Tadesse in Addis Ababa, and Sophie Walker in London)

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