By Tiemoko Diallo

BAMAKO, April 6 (Reuters) - Austria is confident of securing the safe release of two citizens being held hostage in the Sahara by al Qaeda, which has threatened to kill the pair if its demands are not met by Sunday midnight, an envoy said.

In postings on Islamist Web sites, al Qaeda in the Islamic Maghreb, the group's North African wing, has demanded the release of 10 militants held in Tunisia and Algeria and, according to security sources in Algeria, a cash ransom.

"We are confident, and in this respect we share the attitude, the views of the Malian authorities including President Amadou Toumani Toure, that we'll have sufficient time ... (for) our goal of liberating the hostages and bringing them together with their dear ones and relatives back home without being harmed," Austria's Ambassador Anton Prohaska told Reuters.

Prohaska said he could give no details of negotiations, al Qaeda's demands or whether the deadline had been extended.

Andrea Kloiber, 43, and Wolfgang Ebner, 51, disappeared in February while on holiday in Tunisia.

Their captors have already extended the deadline twice, but a fortnight ago set Sunday midnight as a final ultimatum, saying in an Internet posting: "Let Austria, Algeria and Tunisia be responsible for the lives of the kidnapped".

Prohaska has spent the past three weeks in Mali's capital Bamako involved with negotiations for the release of the hostages after they were reported to be at an Islamist hideout in northern Mali near the Algerian border.

CONFUSION

But there has been confusion over the hostages' whereabouts.

Mali's government has said there is no evidence the hostages are on its soil. Officials have speculated they may have been moved following fighting in northern Mali between the army and nomadic Tuareg rebels opposed to the southern-based government.

A Malian Tuareg politician told an Austrian newspaper in late March the hostages were not in Mali. He said their al Qaeda abductors -- who have clashed with Tuareg warriors in the past -- could not conceal their presence from Tuareg tribesmen who roam the isolated expanses of northern Mali.

Rumours have circulated at different times that the pair may have been transferred to neighbouring Mauritania or to Niger, where local Tuareg rebels have launched a similar year-old rebellion against that country's central government.

Prohaska declined to comment on the hostages' whereabouts.

"We don't want to go into detail and do not want to give rise to any speculation of any sort," he said.

Some security specialists have said the kidnappers are unlikely to carry out their threat to kill the Austrians, as that would end any chance of a cash ransom.

Prohaska said in mid-March Austria's government "does not engage in ransom deals of any sort".

On Sunday he declined to discuss the state of negotiations, or specify who was in contact with the hostages' captors.

"We feel like we should act with great restraint and reserve so as to not to endanger our main objective, which is to bring this unfortunate situation to an end." (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com) (Additional reporting and writing by Alistair Thomson in Dakar, editing by Mary Gabriel)

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