The hour-long battle took place yesterday in Palimbang, a
remote town in the south, home to the predominantly Catholic nation's Muslim minority and the scene of decades of conflict.

The bandits were from Ansar al-Khalifa, a small group that declared its support for Islamic State in a video circulated on the Internet last year, regional military spokesman Major Filemon Tan said.

The larger Abu Sayyaf group, a United States-listed terrorist organisation that is holding at least four foreign nationals hostage and has demanded millions of dollars in ransom, has likewise pledged allegiance to IS.

Criminal gangs operate kidnap for ransom and extortion activities alongside Muslim and communist separatist campaigns in the restive south.

Tan said the military was verifying intelligence reports that one of the eight killed was an Indonesian national.

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