'Stakes high in Nepal's renewed peace talks'

The rebels have warned that if the peace talks break down, they will call crippling, mass protests in the capital Kathmandu.

"The rebels' threat of protests in the capital cannot be taken lightly. They are a political group who have weapons, and they have concentrated their cadres in Kathmandu," said Rabindra Khanal, who teaches politics at Kathmandu's Tribhuvan University.

Both sides have observed a ceasefire since protests, spearheaded by the Maoists and political parties in a loose alliance, forced King Gyanendra to end 14 months of absolute rule in April and restore parliament.

But little progress has been made in ending the insurgency, which has killed at least 12,500 people, and the rebels have accused the government of dragging its feet and reneging on promises.

"We can't expect the meeting between the prime minister and the rebel chief to resolve all issues," said Kapil Shrestha, who also teaches political science at Kathmandu's Tribhuvan University.

"But it will be crucial in showing how the two sides can move forward."

The areas of dispute between the rebels and government, and within the multi-party government itself, are manifold.

They include the future of the monarchy, disarmament of the rebels and control of the army and bringing the insurgents into an interim government.

The first meeting between Prime Minister Girija Prasad Koirala and rebel leader Prachanda in June led to a breakthrough announcement that a temporary constitution would be drafted within a month that would allow the Maoists to join a new interim government.

In addition the two sides agreed to hold elections for a constituent assembly that would rewrite the constitution permanently, a key rebel demand.

But little headway has been made since then.