By C. Bryson Hull

COLOMBO (Reuters) - Sri Lanka's government on Monday rejected a reiterated Tamil Tiger offer of a cease-fire out of hand, saying surrender or defeat are the only options left now for their opponents in a 25-year-old war.Analysts say the military is making gains and has the unflinching support of President Mahinda Rajapaksa in its mission to wipe out one the world's most ruthless and effective insurgent groups. Here are some scenarios of what could happen next:

FLANKING THE TIGERS: The military for the last month has said it was on the edge of the rebel capital of Kilinochchi, 330 km (205 miles) north of the capital Colombo. The fighting is heavy at several points encircling the town, and the rebels appear to be dug in well behind a maze of trenches and defences. But while the world's focus has been on that target -- the capture of which would provide a strategic advantage and a morale boost for the military -- soldiers have battled hard up the north-western coast. Troops broke through Nachikkudah, a base for the rebel "Sea Tiger" naval units, a few weeks ago after more than a month of sustained, bloody combat. That cleared the way for soldiers to sweep rebels out of the Devil's Point area north of Nachikkudah while simultaneously heading for Pooneryn.

TAKING POONERYN: The Defence Ministry on Monday said soldiers were crossing the marshes south of Pooneryn, advancing on that strategic spit of land. Tiger artillery batteries there have kept soldiers garrisoned on the Jaffna Peninsula from crossing south towards Kilinochchi. Seizing Pooneryn would open up the A32 road that follows the northwest coast and give the army control of nearly all of the main north-south A9 road to Jaffna. Mechanised units in Jaffna would be free to move south. Kilinochchi would be encircled on three sides.

TIGERS HEAD EAST: With Kilinochchi under pressure, defence analysts say the Tigers have moved more battle-hardened troops there to defend it. But if the army takes Kilinochchi, the rebels would be forced into the jungle -- to which they are accustomed -- and to move east towards the port of Mullaitivu they still control. The army is advancing towards Mullaitivu from the south and southwest with nearly three full divisions and two weeks ago deployed Task Force III -- a new unit shy of division strength -- to fight east along the A34 road that terminates in Mullaitivu.

KILINOCHCHI FALLS: If that happens, analysts and market players say they expect a brief boost to the Colombo Stock Exchange and maybe some temporary relief to depreciation pressure on the rupee. But both tend to move on their own fundamentals after decades of war. Neither is looking good now amid a global financial crisis and an IMF warning that Sri Lanka's economic growth could be at risk if the country doesn't cut spending, stop supporting the rupee and ease reliance on expensive foreign short-term debt.

COUNTERATTACK: The Tigers could do what they have done after losing ground in the 1980s and 1990s, which is regroup and come back hard. But security analysts say the army is three times bigger and much more hardened than it was in the those days, with better weapons and tactics -- especially its use of small commando units for counterinsurgency and intelligence gathering. Anti-terrorism laws have also hit the Tigers' weapon supply, as has the sinking of much of its merchant smuggling fleet by the Sri Lankan navy, with foreign help.

COLOMBO ATTACKS SPIKE: Many analysts are surprised the Tigers have not unleashed more suicide bombings and unconventional attacks in the capital Colombo in response to being pressured up north. Their rudimentary air force of small civilian planes converted for guerrilla use bombed a power station in Colombo on October 28, and there have been at least seven blasts in the city since August 30. But the city is under heavy security and the government has no compunction about carrying out heavy-handed sweeps of Tamil areas to avert future attacks.

(Editing by Valerie Lee)

(Courtesy: Reuters )