KABUL, July 22 (Reuters) - The Taliban kidnappers of 23 Korean hostages on Sunday extended the deadline for the South Korean government to agree to withdraw its troops from Afghanistan by 24 hours to 1430 GMT on Monday.

In Berlin, Chancellor Angela Merkel said Germany would not give in to the demands of the kidnappers -- who also seized two German engineers and killed at least one of them -- to withdraw its troops from Afghanistan.

"We will not give in to blackmail", she told ARD public television.

"The Taliban have extended the deadline by another 24 hours," Taliban spokesman Qari Mohammad Yousuf told Reuters by telephone from an unknown location.

"The Islamic emirate is keen to resolve this issue peacefully and this is extension is aimed at persuading the Korean government to put pressure on Kabul to accept our demands," he said.

South Korea has so far said it will withdraw its 200 military engineers and medics at the end of this year as planned.

A South Korean government delegation was in the Afghan capital Kabul holding talks with government officials.

Yousuf said the kidnappers had extended the deadline "as a sign of honour for the Korean delegation".

While tribal elders tried to mediate between the militants and government negotiators, Afghan forces had surrounded the group of some 70 kidnappers in the Qarabagh area of Ghazni province, south of Kabul, a Western security analyst said.

"Afghan forces have surrounded the location of the kidnappers," he said. "They have no way to escape."

Afghan forces were poised to strike.

"They are awaiting orders to assault suspected locations," the Defence Ministry said in a statement. "The operation will be launched if Defence Ministry authorities deem it necessary."

Taliban spokesmen Yousuf said fighters were holding the captives at different locations. "Any use of force will have dire consequences for the hostages, he said.

URGENT MISSION

The Taliban spokesman said militants had killed their two German hostages on Saturday after Berlin refused to yield to similar demands for it to pull its troops out of Afghanistan.

German authorities have cast doubt on the authority of the Taliban spokesman, and Foreign Minister Frank-Walter Steinmeier said analysis suggested one of the German hostages was alive while the other had died of "stress and strain".

Police found the body of one of the Germans in Wardak province, north of Ghazni, and doctors conducting a post-mortem concluded he died of a gunshot wound, the security analyst said.

The online edition of German weekly Der Spiegel said the dead German hostage, identified only as Ruediger B., was diabetic and died after his kidnappers failed to get him the necessary medication.

The Koreans are the biggest group of foreigners kidnapped so far in the Taliban campaign to oust the Western-backed government and force out foreign troops.

South Korean President Roh Moo-hyun said on Saturday the Koreans were providing free medical or educational services with no missionary intentions.

Tearful relatives prayed for their safe release at their church on Sunday.

"My kids went to the war-ravaged country to do volunteer work, carrying love," said Seo Jung-bae, 57, whose son and daughter were both taken hostage. "I feel like chopping off my foot for letting you go. I hope you will return to us and the country without a single hair damaged."

The area south of Kabul where the Germans and Koreans were seized this week has seen a marked escalation of violence in the last month as Taliban militants have moved in from the south.

Residents say government troops only hold the major towns and much of the countryside is beyond their control.

(Additional reporting by Hamid Shalizi and Jon Hemming in Kabul and Soyoung Kim in Seoul)