Somali pirates have moved a British couple kidnapped from their yacht to a village in Somalia, as the bandits argued over whether to demand ransom or a prisoner exchange, a pirate said yesterday.

"They were taken to a village outside Harardhere and they are fine so far," Abdi Yare told AFP by phone. Harardhere is a pirate lair on the central coast of Somalia.

The British Foreign Office confirmed Friday that the pirates demanded $7 million dollars (€4.7 million) for the release of Paul and Rachel Chandler, who are aged 59 and 55.

But Yare said the bandits were torn between demanding money or a trade for the release of seven pirates detained by foreign anti-piracy naval forces after an attack on a French fishing boat last Tuesday.

"You know there are seven pirates who were arrested by the foreign forces after the attack, some of us are insisting to exchange the two with their friends while others just want to get ransom," he said.

The Chandlers were sailing off the Somali coast on their yacht the Lynn Rival when pirates boarded their boat and took them hostage on October 23.

They were sailing across the Indian Ocean from the Seychelles to Tanzania when they were taken and their 38-foot (12-metre) yacht was later found empty by Britain's Royal Navy.

They were held in a Singapore-flagged container ship which was seized by pirates earlier this month.

A local elder, Abdulahi Mohamed, also told AFP by phone that the couple was taken outside Harardhere, but he said he did not know their exact whereabouts.

The Chandlers have spoken to British broadcaster ITV by telephone. An anxious-sounding Rachel Chandler said last Friday that the two were "safe" and "healthy" and that their kidnappers were "very hospitable people".

A Foreign Office spokesman last Friday could not say what Britain's next steps would be as it tries to free the Chandlers, or whether a negotiator was in place. Britain's stated policy is not to pay ransoms in such situations.

The BBC played a tape last Friday of a man identified as a spokesman for the pirates who said: "If they do not harm us, we will not harm them. We only need a little amount of $7 million."

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