The Sri Lankan navy says it has arrested five Indian nationals and confiscated their trawler carrying 61,000 bomb detonators.
A navy spokesman said the five men were detained late Wednesday off the island's northern coast, an area under Tamil Tiger rebel control, and were handed over to police. He said authorities are trying to determine if the shipment was meant for the rebels.
The seizure came hours after the government and the rebels agreed to hold a new round of peace talks in Switzerland, easing fears that the country may slide back into full-scale civil war.
Meanwhile, Sri Lanka's stock market staged a major rally Thursday as investors cheered the agreement between Colombo and the rebels.
Tamil rebels also released a Sri Lankan policeman in what they call a goodwill gesture, four months after capturing him when he strayed into rebel territory.Some information for this report was provided by AFP, AP and Reuters.