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By Patrick Nduwimana

BUJUMBURA, May 8 (Reuters) - Burundi's army said on Thursday it had killed 50 fighters from the country's last active rebel group in renewed clashes outside the capital Bujumbura.

The attack came barely a day after leaders of the Forces for National Liberation (FNL), an ethnic Hutu guerrilla group, said they would drop an amnesty demand and return to the tiny coffee-growing country to implement a long awaited peace deal.

"The Forces for National Liberation ambushed our troops on patrol. The army then entered into heavy battle with the insurgents ... two soldiers were also killed," army spokesman Colonel Adolphe Manirakiza said.

He said four soldiers had been wounded, 31 rebels captured and several weapons seized.

The rebels blamed the military for the fighting.

"It is really regrettable. At the time we were ready to come back to Burundi to continue talks with the government, the army decided to intensify attacks against our positions," spokesman Pasteur Habimana told Reuters by phone from Dar es Salaam.

"This proves that the government and its army have chosen the war option instead of peace talks."

Burundi, which has a long history of coups and ethnic war, is emerging from more than a decade of conflict between the Tutsi minority and the Hutu majority that killed 300,000 people.

The FNL's persistent insurgency is seen by many as the final barrier to lasting stability in the country of 8 million.

President Pierre Nkurunziza led the other main Hutu rebel during the war and took office in 2005 after lengthy African-brokered peace talks. He heads a mixed Hutu-Tutsi government.

Regional leaders had given FNL commanders exiled in neighbouring countries until May 15 to return to Burundi.

On Wednesday, the hardline Hutu insurgents said they would drop a demand for amnesty and go home, boosting hopes of a political breakthrough. Opposition officials called on the government to stop attacks on rebel positions.

But the battle late on Wednesday in the FNL stronghold of Kabezi, 20 km (12 miles) south of Bujumbura, raised doubts over the new hopes and brought the death toll to 103 since the latest upsurge of violence began in April.

Burundi's government has faced allegations of corruption and rights abuses since its inception.

But President Nkurunziza has been relatively quick to punish any of his allies seen as damaging the administration early reputation as a homegrown African success story. (Writing by Wangui Kanina; Editing by Katie Nguyen and Matthew Tostevin) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/)

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