(MANILA) - The European Union said Monday it will extend seven million euros, or almost 10 million dollars, in emergency aid for people displaced by the Muslim insurgency in the southern Philippines.

The announcement by the EU, one of the largest sources of official development aid to the predominantly Roman Catholic southeast Asian country's Muslim region, followed similar pledges of more aid from UN agencies.

Alistair MacDonald, head of the European Commission office in Manila, urged the government and the Moro Islamic Liberation Front (MILF) to end the fighting on the island of Mindanao and resume peace talks.

It is "reaching the point where resources are being thinly stretched," he said.

Fighting flared up in August after the Supreme Court suspended a draft agreement that could have led to a peace accord with the 12,000-member MILF, which has been waging a four decades-old campaign to set up an Islamic state.

Hardline MILF units attacked Christian communities, burning and looting homes and killing civilians in fighting that has claimed about a hundred lives and forced half a million people to flee their homes. About 100,000 are still in evacuation centres.

In the latest incident, three Filipino soldiers were wounded when a military convoy hit a landmine near Valencia city on Saturday, the Philippine army said in a statement Monday.

MacDonald said the EU retained "a lot of optimism" about the prospects for peace.

The EU aid package includes up to four million euros in immediate humanitarian relief for the affected population.

The EU also approved a grant of three million euros to address the problems of civilians who had been displaced by fighting in recent years and had not been able to return to their homes.

Over the past decade, the EU said it has approved about 33 million euros in assistance to people displaced by the Mindanao conflict, on top of 93 million euros in development aid.

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