Kathmandu, Sept. 29 (Reuters): Nepali troops shot dead 11 Maoist rebels today, as the government prepared a response to the latest terms for fresh talks by the guerrillas who shut down nearly half of the kingdom on the second day of a strike.

A police spokesman said seven Maoist rebels were killed after a firefight with a police patrol at Khaskusma, 450 km west of Kathmandu.

?The firefight took place after the police, acting on a tip from villagers, patrolled the area and encountered the rebels,? police spokesman Rabi Thapa Chhetri said. The dead included two women guerrillas. Elsewhere, soldiers shot dead four Maoists in separate gunbattles.

There has been no major fighting in Nepal since March but eight people die each day on an average in unabated violence after talks between the government and Maoists, who want to topple the constitutional monarchy, failed last year.

Maoist chief Prachanda, responding to Prime Minister Sher Bahadur Deuba?s latest offer last week to resume the dialogue, was seeking assurances the Prime Minister had the backing of warring political parties and King Gyanendra to negotiate.

Information and communication minister Mohammed Mohsin said a peace panel of top leaders of the four-party ruling coalition was meeting today to craft a response to the rebels. ?We are trying to formulate a consensus approach for the dialogue to restore peace,? Mohsin said.

The fresh bid for peace came as schools, colleges, businesses and most public transport in Kathmandu and east Nepal were shut for the second day in response to the strike called by the rebels to protest the killing of two guerrilla leaders this month.

Troops stood guard at key intersections in the capital, as a few taxi drivers and motorcyclists ventured out, some with licence plates covered to avoid being identified by rebels. Yesterday, a bomb exploded on the outskirts of Kathmandu, causing minor damage to a bank, but no one was injured.

Police said suspected Maoists hid the bomb in a package left in a taxi, but the alert driver threw it into a deserted street where it exploded.

More than 10,000 people have died in the insurgency since it broke out in 1996 in the Himalayan nation. The rebellion has frightened away tourists and slowed foreign-funded projects in one of the world's poorest nations.

The Maoists, who want to set up a communist republic, are also demanding that the government resist pressure from the army and accept the involvement of the UN or global human rights bodies in talks. They want the talks to consider their demand for an assembly to prepare a new constitution to decide the future of the monarchy.

Six Nepali soldiers who completed a patrol near a Maoist rebel stronghold died on their return when their boat became entangled in a fish-breeding net and sank, police said today.