By Ranga Sirilal

COLOMBO, Feb 5 (Reuters) - Sri Lankan jets bombed rebel positions in the island's far north on Tuesday, the military said, as a 25-year civil war deepens daily.

The government is trying to drive the rebels from their northern positions and the military said 21 rebels and 3 soldiers were killed in ground fighting on Monday in several northern districts.

The military has captured large swathes of territory from the Tigers in the east of the country and vastly outmans and outguns them. But observers see no clear winner on the horizon and expect the war to grind on for years.

"We have taken two targets today," said Air Force spokesman Wing Commander Andrew Wijesuriya. "One was an LTTE administration and operations coordinating centre ... the other is a local area command building."

The Liberation Tigers of Tamil Eelam, fighting for an independent state in the north and east, were not immediately available for comment on the violence.

A roadside bomb planted by suspected rebels ripped through a civilian bus in the northeastern district of Polonnaruwa on Monday, killing 14 people and wounding dozens, the military said.

It was the latest in a litany of such attacks and analysts say the Tigers are increasingly focusing on civilians because they are easier prey.

A small Navy patrol boat and its four crew were also missing at sea after a clash off the island's northwest coast late on Monday, when it was fired on by suspected rebels hiding among a cluster of Indian fishing boats, officials said.

ENDGAME OR STALEMATE?

Fighting between the military and the rebels has intensified since the government scrapped a six-year ceasefire pact last month to the alarm of the international community.

President Mahinda Rajapaksa argued the rebels were using it to regroup and re-arm and were not sincere about talking peace.

"Winning or losing is not a matter of body count," said retired Major-General Dipankar Banerjee, director of the Institute of Peace and Conflict Studies in New Delhi.

"There is no end to this conflict in the short-term. This will go on for quite some time. Neither side is winning."

"Until the government changes its mind ... gives up the strategy of winning peace through war, as long as the war option remains, it will be pursued until such time that casualties are such that you give up the war option," he added. "As of now, there is no chance of either side giving way."

Attacks blamed on the Tigers are increasingly focused on civilians, as in earlier stages of the conflict, involving bus bombings and suicide attacks in civilian areas.

Thousands of people have been reported killed in recent months, though analysts say both sides tend to exaggerate enemy losses. The conflict has killed an estimated 70,000 people since 1983.

The bulk of fighting has been in the far north in recent months, well off the tourist trail, but attacks are increasingly scattered and unpredictable, with several in the capital and prompting some foreign governments to issue travel advisories.

Fighting has also dented confidence among Sri Lankan investors, with the stock market falling 6.7 percent in 2007 and another 4.2 percent so far this year. Some businesses have put investment plans on hold, fearing more violence.

Officials say tourist arrivals, which fell 11.7 percent in 2007 from a year earlier with revenues down even more, could suffer further if attacks continued to escalate and spread. (With reporting by Simon Gardner and Shihar Aneez. Edting by Simon Gardner and David Fogarty)

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