On Monday afternoon in northern Shan state's Muse district, two government army columns with an estimated combined forces of more than 200 troops advanced to KIO controlled areas near Mongkoe, witnesses told Kachin News Group.

It is believed that that the Burmese troops are from Infantry Battalion No. 123 based in Nampaka.  According to local residents the KIO forces involved in the fighting are from the special Mongkoe Battalions 36 and 38.

KIO officials in the field say that more Burmese reinforcements are on their way to a base in Mongkoe to join troops from Infantry Battalion No. 239 who are already there.

Fighting in the Mongkoe area continued well into the evening on Monday, according to local residents.

Peace talks prove fruitless
The latest fighting in northern Shan state came less than 24 hours after a joint statement issued by negotiators from both the KIO and the Burmese government claimed that “The two sides believe that military tensions would be decreased as a result of the peace talks.”

The statement also said that “The peace talks will continue through political means,” no date however was given for when the next round of talks will take place.

The joint statement issued on Sunday came one day after the latest meeting between the KIO and the government negotiators ended in Ruili without an agreement.

China denies that fighting will affect Shwe gas Pipeline construction
Over the past the few months heavy fighting has been frequent along a stretch of KIO-controlled territory between Namtu and Mandong townships where the massive Shwe gas pipeline project is currently under construction.

When completed the billion-dollar project will send fuel from Burma's Arakan coast to China's Yunnan region along twin oil and gas pipelines. The project is headed by a Chinese state-owned firm China National Petroleum Corporation (CNPC) in partnership with Burma's state-owned Myanmar Oil and Gas Enterprise (MOGE).

Despite frequent reports of heavy fighting along the projected pipeline corridor, both senior Burmese and Chinese officials have claimed that the Kachin conflict will not disrupt the project, "At present, the construction of the oil and gas pipelines is proceeding smoothly and there are no outstanding problems,” Yunnan's public safety director told reporters last week. Burma's Energy Minister made a similar claim earlier this year during an interview with Reuters.

The KIO for its part says it has no plan to sabotage the twin pipelines. It remains unclear however if the pipeline will be finished by its official completion date in 2013.

Full text of Burma and KIO’s joint-statement
1. The two sides have satisfied the peace talks between the Union level peace-making group of the Republic of the Union of Myanmar and KIO's central delegation.

2. The peace talks have seen progress and the two sides could build trust during the meetings.

3. The peace talks will continue through political means.

4. The two sides believe that military tensions would be decreased as a result of the peace talks.

5. The two sides will continue to discuss the issues related to the outposts in conflict areas until the two sides reach an agreement and will carry on the agreement after setting dates.