Nepal was preparing a response to the latest terms for fresh talks from Maoist rebels, a minister said yesterday, as nearly half of the kingdom shut down for a second day in a rebel-sponsored strike.

Maoist chief Prachanda, responding to Prime Minister Sher Bahadur Deuba’s latest offer to resume the dialogue, was seeking assurances the prime minister had the backing of warring political parties and King Gyanendra to negotiate.

Information and Communication Minister Mohammed Mohsin said a peace panel of top leaders of the four-party ruling coalition was meeting on Wednesday to craft a response to the rebels. “We are trying to formulate a consensus approach for the dialogue to restore peace,” Mohsin told Reuters, but gave no more details.

The fresh bid for peace came as schools, colleges, businesses and most public transport in Kathmandu and east Nepal were shut for the second day in response to the strike called by the rebels to protest the killing of two guerrilla leaders this month.

Troops stood guard at key intersections in the capital, as a few taxi drivers and motorcyclists ventured out, some with license plates covered to avoid being identified by rebels.

On Tuesday, a bomb exploded on the outskirts of Kathmandu, causing minor damage to a bank, but no one was injured. Police said suspected Maoists hid the bomb in a package left in a taxi, but the alert driver threw it into a deserted street where it exploded.

More than 10,000 people have died in the insurgency since it broke out in 1996 in west Nepal.

The Maoists, who want to set up a communist republic in the impoverished nation, are also demanding that the government resist pressure from the army and accept the involvement of the United Nations or global human rights bodies in the talks.