Philippines - Tribal gunmen freed dozens of hostages in the southern Philippines on Sunday after authorities transferred murder cases against them to a tribal court and disarmed both them and a rival group.

The gunmen had abducted 71 people in Agusan del Sur province on Thursday as they fled police pursuing them after a gunbattle with their rivals, but had freed 29 over the next two days.

A Reuters team saw the remaining 42 hostages brought down from the mountain hideout of the gunmen and driven to Prosperidad town in a convoy in heavy rain, with the leading car carrying a banner saying Peace reigns in Agusan.

The gunmen were also in the convoy after surrendering their weapons.

At last the crisis is over, provincial vice-governor Santiago Cane told reporters. The guns, bullets and grenades of these men are with me now.

The hostage crisis in the lawless Mindanao region came just three weeks after 57 people were massacred in nearby Maguindanao province in an attack bound to raise tensions ahead of a presidential election next year.

The Mindanao region is full of bandits, communist guerrillas and Islamic rebels. Powerful local families maintain large private armies and feuding among them is common.

Financial markets have more or less shrugged off the massacre and the hostage crisis since they took place in Mindanao, which is far away from Manila and Luzon island, the industrial centre of the country.

But analysts have said any prospects of violence spreading in the run-up to May's election could cast a pall over investor sentiment.
In Agusan, negotiators had said the hostage-takers had demanded that murder cases against them be dropped. They had also demanded police disarm rivals from the same tribe, with whom they are feuding.

Clan wars, known locally as rido, are common in the south.

Studies funded by the Asia Foundation and the U.S. Agency for International Development in 2007 found there had been more than 1,200 clan feuds in the south since the 1930s, killing nearly 5,000 people and displacing tens of thousands.

(Additional reporting by Manny Mogato; Editing by Raju Gopalakrishnan and Alex Richardson)