Several dozen Maoists have been killed as the army Saturday continued an operation for the second day to free 71 policemen abducted by rebels from a police outpost in Rolpa district Thursday, a security source said. Government sources have not confirmed any Maoist casualties.

A crack contingent of 500 soldiers began a search and rescue operation at dawn Saturday in the jungles of the mountain district 650 kms northwest from Kathmandu to rescue the hostages.

Maoist casualties could be higher but casualties on the army side were not available. The army is telling the rebels to surrender and free the policemen or face stiffer action. Reports that they had surrendered with weapons could not be immediately confirmed.

The army launched its first operation against Maoists Friday when the rebels shot at an army helicopter injuring the pilot and two others. Troops were airlifted to the insurgency-affected district from the capital by the entire fleet of army helicopters.

The army sealed all exit points near the village of Holeri before launching the operation; the rebels were scheduled to hold a mass meeting there. The operation is expected to last several more days. Total Maoist fighting force in far-west Nepal is estimated at 2000.

The Maoist casualties will come as a big setback for the rebels fighting for a communist state as the insurgency has claimed more than 1700 lives in nearly six years.