Almost half of Galle's families lost their homes in the tsunami
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The historic city of Galle, where Tamil Tigers have carried out a dramatic attack on the navy base, is one of Sri Lanka's most important tourist destinations.
It is the first time a tourist hub has been caught up in the latest fighting and a curfew has been imposed.
The city, some 110km (70 miles) south of the capital Colombo, was also badly affected by the December 2004 tsunami.
Its Old Fort, built by the Dutch in 1663, and the coastline's pristine beaches, have long attracted tourists.
Tsunami effects
When the tsunami struck the city on 26 December 2004, it washed away homes and livelihoods, devastating both the city's tourism and fishing industries.
At least 30,000 people died along Sri Lanka's coast.
According to the government, almost half of all homes in the Galle area were damaged so badly that they could no longer provide shelter.
The city is now recovering but locals complained that as the relief effort was co-ordinated from the capital, aid was slow and patchy in arriving.
Experts say tourism has inevitably suffered. The numbers of tourists arriving in the country as a whole in January 2005 were down by more than 20% from a year earlier, for example.
World Heritage Site
Galle, located on the south-western tip of Sri Lanka, was founded by the Portuguese in the 16th century.
The city is named after the Portuguese fleet that landed there in 1505.
Today, it is the site of Sri Lanka's main southern naval base and an important tourist destination.
The majority of the 100,000 residents are Sinhalese. There is also a considerable Sri Lankan Moor minority.
The Old Town of Galle and its fortifications were named as a Unesco World Heritage Site in 1988.
The city is also home to an international cricket stadium and twinned with the Australian city of Melbourne which adopted it after the 2004 tsunami and helped fund the reconstruction of the venue.