Tribal gunmen holding 57 people in the southern Philippines have agreed to free their captives, the hostage negotiator said, as the ordeal entered its second day.

"The group is still holding 57 hostages, all of them adults. They are okay and alive," said the negotiator Josefina Bajade, who is also the social welfare officer in Prosperidad town on Mindanao island where the kidnappings occurred.

NONE "They said they were willing to give up and release their hostages. We are optimistic they will be freed soon, hopefully within today," Bajade told AFP.

Tribal gunmen from the Ordonez clan wanted for the killing of a member of a rival family raided a school and abducted 75 people on Thursday.

Bajade negotiated for the release of all the 17 school children and one adult hours later.

The gunmen, she said, were led by brothers Ondo and Carlo Perez who are wanted by police for a string of crimes, including the killing of a member of the rival Tubay family.

Bitter dispute

Both families belong to the indigenous Manobo tribe and have been locked in a bitter dispute over land for years, Bajade said.

NONE Police on Thursday said the gunmen had demanded that police lift arrest warrants against them, and for rival family members to be arrested and disarmed.

The mass kidnapping is the latest outburst of crime in the volatile Mindanao region in recent weeks, following the beheading of a logging company employee on Wednesday and a political massacre that left 57 people dead.

The incidents have highlighted political instability in the Philippines, where President Gloria Arroyo, a US ally, is due to step down next year after two terms in office.

-AFP