COLOMBO, Nov 1 (Reuters) - Sri Lanka's air force bombed Tamil Tiger targets in the island's restive east on Wednesday, the military said, as fears rose of an escalation in violence three days after peace talks collapsed.

The air raid in the restive eastern district of Batticaloa comes amid renewed artillery and mortar fire in the north and east.

"They are firing artillery and mortar fire at us in the east, so we have retaliated by neutralising targets with an air raid," military spokesman Brigadier Prasad Samarasinghe told Reuters.

There was no immediate word on casualties, but the Tigers accused the military of firing first.

"The pattern of firing and bombing are indicative of a large scale military offensive being planned by the Sri Lankan military," the rebels said in an email.

Early on Wednesday suspected rebels detonated a mine in the northern district of Vavuniya, killing a civilian, while the navy sank a suspected rebel boat off the northwest coast on Tuesday.

The talks in Geneva collapsed on Sunday over the government's closure in August of the main north-south A-9 highway, which runs through rebel territory and to the isolated, northern army-held Jaffna peninsula.

The government has so far refused to reopen the road, arguing that rebel artillery fire makes it unsafe and that the Tigers have been moving troops and munitions on it and that they raise war funds by demanding a "tax" from vehicles passing along it.

Residents in predominantly Tamil Jaffna decry the closure and the fighting, saying food and fuel are in short supply and artillery fire is making it hard to sleep. The military is shipping essential rations in by boat and air.

The government's chief peace negotiator said on Tuesday it would reopen the highway if the rebels stopped attacks. The Tigers have not responded.

Many analysts and ordinary Sri Lankans fear the collapse of the talks could signal the escalation of a new chapter of a two-decade civil war that has already killed more than 65,000 people since 1983.

In Colombo, around 1,000 people protested a growing scourge of "disappearances" and extra-judicial killings blamed on both sides of the conflict.

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