By Abdi Sheikh

MOGADISHU, Oct 7 (Reuters) - Two Western aid workers kidnapped by Somali gunmen on the Ethiopian border are in good health and ransom negotiations are underway for their release, local residents said on Tuesday.

The pair, a man and a woman, worked for Medecins du Monde and were abducted last month while on a humanitarian mission in Ethiopia's remote eastern Ogaden region, which borders Somalia.

Kidnapping of foreigners has become common in Somalia, where a weak interim government is fighting Islamist insurgents and clan militia who control large areas. Most are freed unharmed.

Medecins du Monde have not released the nationalities of the pair, but foreign media have quoted diplomats in Addis Ababa as saying they are a Japanese woman and Dutch man.

Local resident Abdulle Omar told Reuters the two aid workers were being held in thick woods near Gurael, in Somalia's Central Region, but appeared to be well treated by their captors.

"They are safe and healthy," Omar said.

"They don't look like prisoners because tents have been put up for them. There are two ladies who cook food for them and the gunmen who are holding them. I went near but was sent back by the gunmen. Nobody knows how much ransom they want."

One woman in the area said a prominent local trader from the kidnappers' clan had been appointed to mediate with the gunmen, and that Somalis living in Japan and the Netherlands had been contributing funds to pay a ransom.

"The money will be transmitted by Thursday and the aid workers will be hopefully released," said Fatuma Osman.

Gurael is about 500 km (300 miles) north of Mogadishu. (Writing by Daniel Wallis)

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