GOMA. Zaire. Feb 2: The leader of Zairean rebels holding much of the east of the country. Laurent-Desire Kabila, said Friday his forces had captured the strategic town of Watsa. 500 kilometres (300 miles) north of Goma, reports AFP.

But he added that foreign mercenaries were holding out near the airport.

"We took Watsa this morning." Kabila told AFP. "The town has been completely cleaner up ... it was an important base for mercenaries, particularly South African."

He also said rebel forces, who have set up their own administration in north and south Kivu provinces bordering Rwanda, now were 30 kilometres (20 miles) from Kalemie, southeast of Goma.

Kalemie is a strategic port on Lake Tanganyika which has a rail link to the resource-rich Shaba province.

Watsa is at the centre of a very rich gold-bearing region close to the Sudanese and Ugandan borders. The town was seen as a bridge-head for the counter-offensive launched by the Zairean government to retake the land In rebel hands.

AP adds from Kinshasa: The army Friday exhibited three prisoners it said had been arrested during fighting in eastern Zaire, including a Rwandan and . a Ugandan soldier and.a third

man identified as a doctor for an international aid group.

Seeking to bolster charges of cross-border incursions from neighbouring armies. Zairian Capt. Njoli Esenge Ekeli said the prisoners represented "irrefutable proof of the ... partici -

pation of Rwanda and Uganda in the war in the east of our country."

Esenge said the three were among "many" rebels and foreign soldiers arrested in the past week during fighting in Nie Nie, near the eastern border with Uganda, and in the eastern city of Walikale. He gave no numbers but said many of the prisoners were badly wounded and receiving treatment in Kisangani, from where the Zaire army launched a counteroffensive last week.

Each of the men made brief comments to Journalists, who were called to the Defence Ministry building to see them.

One man identified himself as Joseph Mupinganayi and said he was a doctor for the French-based aid agency Doctors Without Borders. Mupinganayi. whom Zaire has accused of spying, said he had been treating rebels as well as Zairian troops in the warzone when he was seized in Nie Nie. He denied being a spy.

A Rwandan ’ army officer identified as Claude Alain Kalisa and wearing a plaster cast on one leg told reporters he had joined the rebels to prevent Zairian troops from teaming up with Hutu militants to attack his country.