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Mutinying soldiers stand in guard at the checkpoint of the entrance of Bouake, Ivory Coast May 15, 2017. REUTERS/Luc Gnago

(reuters_tickers)

By Ange Aboa

BOUAKE, Ivory Coast (Reuters) - Renegade soldiers in Ivory Coast on Monday rejected a proposed deal to end their mutiny over unpaid bonuses just minutes after the defence minister announced on state-owned television that an agreement had been reached.

President Alassane Ouattara's government has been trying to restore order for four days after 8,400 mutineers took control of the second-biggest city, Bouake, and spread their revolt to cities and towns across the country.

Heavy gunfire on Monday paralysed much of Abidjan, the commercial capital, and the western port city of San Pedro, echoing another mutiny earlier in the year and further threatening Ivory Coast's emergence from a 2011 civil war as one of the world's fastest growing economies.

Ivory Coast is the world's largest producer of cocoa and London futures <LCCc2> climbed to a five-week high on Monday due to the unrest.

Ouattara, 75, secured a second term in a landslide victory in 2015, but has struggled to heal deep divisions that have made the country's own military, cobbled together from rival rebel and loyalist factions, its greatest security threat.

The government paid the mutineers - most of them former rebels who helped Ouattara to power - 5 million CFA francs ($8,400) each to end an uprising in January.

But it has struggled to keep a promise of a further payment of 7 million CFA francs amid a revenue crunch caused by a collapse in cocoa prices.

Defence Minister Alain-Richard Donwahi said on state television late on Monday: "To end the stalemate and avoid any more bereavement of families, the army chief of staff held talks with the soldiers on Sunday and Monday. ... The talks have resulted in an arrangement to end the crisis."

But two spokesmen for the mutineers confirmed that the government's proposal had been rejected.

"They proposed 5 million CFA francs (6,479 pounds) to be paid tomorrow (to each soldier). But we want 7 million to be paid in one payment and immediately," Sergeant Seydou Kone, one of the spokesmen, told Reuters.

Another mutineer spokesman in Bouake, Sergeant Cisse, said the soldiers would return to barracks "once the 7 million is deposited in our accounts."

BANKS, BORDERS CLOSED

Authorities earlier on Monday said they would maintain a firm line with the mutiny, and that there were no negotiations underway, according to government spokesman Bruno Kone, though lines of communication remained open.

The head of the army said on Sunday that a military operation had been launched to "re-establish order". But a Reuters team travelling there from the capital Yamoussoukro saw only a handful of loyalist military vehicles.

Most of the large column of troops spotted on the road on Sunday evening appeared to have withdrawn.

More than 200 commercial trucks meanwhile were stranded on the roadside south of Bouake after mutinous soldiers sealed off entrances to the city, Reuters witnesses said.

Sporadic gunfire was heard overnight in Bouake as well as at military camps in Abidjan and intensified before dawn. Mutinying soldiers also maintained their control of the national military headquarters and defence ministry in Abidjan's city centre.

The main border crossing with neighbour Burkina Faso north of the town of Ouangolodougou was closed by the revolt, residents and the head of a transportation association said.

In signs of the economic impact of the crisis, the banking association, the APBEF, ordered banks to remain closed and many businesses at the port in Abidjan, one of West Africa's busiest, were also shut.

Data from Tradeweb showed Ivory Coast dollar bonds maturing in 2024 fell 0.8 cent in price to a three-week low <XS108941308=TE> while the 2028 issue dropped 1.2 cents <XS119651743=TE> to its lowest level in 10 days due to the unrest.

Heavy shooting also erupted in Daloa, a hub for western cocoa growing regions.

"All businesses are closed here in Daloa. The banks are closed and so are the cocoa buying businesses," said Aka Marcel, a farmer cooperative manager in Daloa.

A spokesman for the mutineers denied rumours of clashes with government troops in Bouake and said the renegade soldiers were firing in the air to dissuade any government advance.

The Abidjan-based African Development Bank [AFDB.UL], which employs several thousand people, told its employees to stay home.

($1 = 598.3600 CFA francs)

(Additional reporting by Joe Bavier and Loucoumane Coulibaly in Abidjan; Editing by Edward McAllister, Matthew Mpoke Bigg, Louise Ireland and Jonathan Oatis)

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