Malaysian arms gang attacked

Police have set up roadblocks around the area

Malaysian troops have attacked the jungle hideout of a gang who stole a major weapons haul from two army camps.

The 15-strong gang, who are holding three men hostage, fought back the artillery assault.

The gunmen, disguising themselves as army officers, stole assault rifles, grenade launchers and machine guns from the armoury on Sunday.

Two of their hostages are believed to be police intelligence officers.

Weapons haul

94 M-16 rifles

Two Steyr rifles

Five grenade launchers

Four heavy machine guns

Six light machine guns

Thousands of ammunition rounds

Correspondents say they heard mortar fire and gunfire during the night near the gang's hideout in a remote area near the Thai border in the state of Perak.

Thousands of police and soldiers have encircled the area, and road blocks have been erected to keep journalists and the public away.

The military said there have been no fresh casualties, but on Wednesday a local newspaper published pictures of soldiers being treated for bullet wounds.

Security concerns

The incident has raised concerns about the efficiency of Malaysia's security system and its military.

Two police intelligence officers are thought to have been taken hostage while on a reconnaissance mission.

The third hostage is a local farmer, who was abducted while picking durian fruit in a nearby orchard.

The gang descended on an isolated army outpost on Sunday, dressed in uniforms with ranks of captain, major and lieutenant colonel complete with military berets and epaulettes - and said they wanted to conduct weapons checks.

They then moved on to an army camp at the town of Gerik, where they posed as an inspection team.

They were seen driving off with their haul in three Pajero Jeeps, painted to look like military vehicles, which were later found abandoned.

The Malaysian Government suspects the gunmen stole the weapons to sell them on the black market.

Defence experts estimate drugs-smugglers, pirates or guerrilla groups in neighbouring countries would be willing to pay up to $200,000 for the arsenal.