COTABATO, (Phillipines) - MUSLIM separatists traded mortar fire with troops in the southern Philippines just hours after the Supreme Court stopped a land deal between them and the government, the military said on Tuesday.

The mortar attack by an unknown number of Moro Islamic Liberation Front (Milf) rebels on soldiers stationed near Midsayap town lasted for about half an hour late on Monday, the military said.

The rebels had taken positions in the town's outskirts, displacing more than 300 families, in violation of a 2003 ceasefire accord, the military said.

'The Milf fired about a dozen mortars toward army positions', said regional army spokesman Lieutenant Colonel Julieto Ando.

'We returned mortar fire, but there were no reports of casualties'. Lt Col Ando said the rebels who attacked apparently ignored commands from the Milf leadership to leave the area as both sides negotiated a deal on territory.

The attack came after the Supreme Court in Manila stopped the government from signing a deal that would have given the Milf administrative and economic power over a large semi-autonomous area in southern Mindanao island.

The deal was to have been signed Tuesday in Malaysia, which has been brokering peace talks between the two sides.

The agreement was meant to pave the way for a final political settlement to end the Milf's 30-year fight for an independent Islamic state in the southern third of this largely Roman Catholic nation. -- AFP