At least 18 people are missing feared dead after a Chinese fishing boat was sunk off the eastern coast of Sri Lanka.
Tamil Tiger boats operate in the area
The attack was carried out by a vessel belonging to the Tamil Tiger rebels, navy officials said.
Rebel naval commanders have denied any involvement in the incident, the pro-Tamil website TamilNet reported.
The attack came as government and rebel negotiators ended four days of talks in Japan seeking to end the long-running civil war.
The Chinese trawler Ufauan-u 225, sank north of Mullaittivu, a Tiger stronghold.
There were 27 people reported on board the ship - a military spokesman said the other nine were rescued.
"We were told by the Chinese that the suspected Tamil Tigers surrounded the trawler with small boats and then fired RPGs (rocket-propelled grenades)," the AFP news agency quoted an unnamed naval spokesman as saying.
According to the navy, one Chinese trawler came under attack and sank and then a second came to its rescue, picking up eight Chinese and one Sri Lankan.
One of the Chinese was said to be in a serious condition.
International peace monitors, overseeing a year-long ceasefire in Sri Lanka, said they had boarded the second trawler and it was being escorted to shore by the navy.
The BBC's Frances Harrison in Colombo says there is no apparent reason for the rebels to attack Chinese fishermen.
The Sri Lankan military said the Chinese boats were well within their rights to fish in the area because they were part of a government-approved commercial project.
There has been no word yet from the Tamil Tiger rebels who control this part of the coast.
Balasingham (L) and Peiris (R): "Step-by-step" progress in Japan
But military officials say this was perhaps a case of mistaken identity.
Earlier in March, the navy sank a rebel vessel, killing 11 Tiger fighters.
The incident threatened to cast a shadow on the peace talks taking place this week in the Japanese mountain resort of Hakone.
Tamil Tiger rebels had threatened to boycott the talks - the sixth round - but eventually went ahead with them.
At the talks on Friday, the two sides did not comment directly on the sinking of the Chinese trawler.
However, they did agree in general to instruct their naval units to exercise restraint.
The two sides conceded they had not made dramatic progress but maintained the process was on course.
Government chief negotiator GL Peiris said: "We may not have made remarkable, unrealistic speed but we have been able to agree on practical steps to move forward step-by-step."
One was an agreement by the Tigers to allow rival Tamil parties to
conduct political activities in areas held by them.
The rebels' chief negotiator, Anton Balasingham, said the concession showed the
Tigers' commitment to democracy.
However, the two sides failed to clinch a human rights deal envisaging international monitoring and benchmarks for implementation.
The matter was put off to the seventh round of peace talks scheduled for 29 April to 2 May in Thailand.