By Daren Butler
ISTANBUL (Reuters) - The Kurdish militant PKK group said on Thursday media reports that its fighters had agreed to withdraw from Turkey as part of a peace pact to end their 28-year-old insurgency were lies and part of a psychological war.
The Sabah newspaper on Thursday said Kurdistan Workers' Party guerrillas had agreed to withdraw to northern Iraq, where the group is based, by March 21 as part of peace talks with the PKK's jailed leader Abdullah Ocalan started late last year.
Turkish Prime Minister Tayyip Erdogan has staked much political capital on the talks, given the potential for a nationalist backlash ahead of elections next year.
Media reports in recent days of a planned pullout have fuelled optimism about progress towards an end to the conflict which has killed some 40,000 people.
The PKK statement denied those reports as well as others in Turkish media that said Ankara was in talks with the militants in northern Iraq.
"The stories on this subject are also completely invented lies," the statement said. "These stories are activities in a deliberate psychological war aimed at manipulation."
Sabah, which is close to the government, said the PKK pullout would begin at the start of March when the weather in southeast Turkey turns milder. It said Ocalan, imprisoned on Imrali island south of Istanbul, was expected to issue a call within 10 days for the militants to declare a ceasefire after Kurdish politicians visit him.
Sabah did not name its source. Only a few officials are involved in the talks and have not disclosed details publicly, with the government wary of endangering its support ahead of local and presidential elections in 2014.
The PKK said it fully supported Ocalan representing the group in negotiations and called for him to be allowed to hold talks with the rest of the rebel leadership. He has been held in near isolation since he was captured in 1999.
"Talks between the leader Apo (Ocalan), our leadership and elements in the KCK (rebel umbrella group) must be facilitated for the process to advance properly in a way that will achieve results," it added.
ERDOGAN AIMS TO STRIKE BALANCE
The rebels took up arms in 1984 with the aim of creating a Kurdish state in southeastern Turkey. Declared a terrorist group by Ankara, the United States and the European Union, the PKK has since moderated its goal to one of autonomy.
In return for the withdrawal of the militants and their ultimate disarmament, the government is expected to boost the rights of Kurds, who make up about 20 percent of Turkey's population of 76 million.
As part of those reforms, Turkey's parliament last week passed a law allowing defendants to use Kurdish in court in a move seen aimed at breaking a deadlock in the trials of hundreds accused of links to the PKK. [ID:nL6N0AU2VN]
President Abdullah Gul approved the law late on Wednesday and a court in the southeastern city of Diyarbakir officially allowed the first Kurdish testimony on Thursday. Defendants have spoken in Kurdish before but on those occasions the court switched off their microphones.
The PKK are likely to be wary about pulling out of Turkey.
Their fighters withdrew from Turkish territory on Ocalan's orders after his 1999 capture as part of moves towards peace, but several hundred militants are estimated to have been killed by security forces during the withdrawal.
Erdogan gave his word this month that the same thing would not happen again.
The prime minister sought on Thursday to strike a middle ground between supporting the peace process while maintaining a hardline against the militants.
"We will not give the slightest ground in the struggle against terrorism," he said in a speech to provincial governors.
"We will also not give ground on democratization, investments and the law, as we continue to solve this problem together with our people," he said.
(Additional reporting by Seyhmus Cakan in Diyarbakir; Writing by Daren Butler; Editing by Nick Tattersall and Sonya Hepinstall)