HIGHLIGHTS: Attackers Demand Russia Pull Troops from their Chechen Muslim Homeland||Putin Calls Off Trip to Germany & Portugal to Deal with Drama at his Doorstep|| Movsar Barayev, Attackers Leader Threatens to Blow up Entire Building with those Inside if Building is Stormed|| Two Prominent Figures in Moscow's Chechen community Report Varying Degrees of Success in Efforts to Negotiate with Attackers|Russian Policeman Killed at Hostage Scene||| Putin Wins Immediate Sympathy for his Plight from Washington||20 Children Immediately Released||Some Muslims and Batches of Hostages were Released at Rregular Intervals Throughout the Night|| Putin Due in Mexico for an Asia-Pacific Summit & Talks with Bush on Iraq & North Korea||Three Germans & Three Britons Among Hostages|| STORY: Chechen fighters held hundreds of Moscow theater-goers hostage overnight on Thursday and threatened to blow up the building and all inside if security forces tried to storm it.

The group of about 40, including masked women strapped with explosives, burst into the theater on Wednesday evening firing shots in the air and shouting "Stop the war in Chechnya." They demanded Russia pull its troops out of their Muslim homeland.

The spectacular attack was a stinging blow to President Vladimir Putin, who called off a trip to Germany and Portugal to deal with the drama on his doorstep. An official said the group described themselves as a resistance death squad, or "smertniki."

One hostage, reached on her mobile telephone inside the theater, said the fighters had fastened explosives in passageways, on seats and even to hostages themselves.

"A huge amount of explosives have been laid through the place," child heart specialist Maria Shkolnikova told Reuters.

The Chechen news Web Site www.kavkaz.org carried what it said was a statement by the attackers' commander, Movsar Barayev: "There's more than a thousand people here. No one will get out of here alive and they'll die with us if there's any attempt to storm the building," the Web Site quoted him saying.

He called on Putin to stop the war and pull his troops out of Chechnya if he wanted to save the hostages' lives -- demands that were confirmed by Russian officials at the scene.

Some nine hours after the drama had begun, reporters nearby heard brief gunfire coming from the direction of the theater.

There was no immediate explanation for the shots. But Interfax news agency quoted an unnamed hostage in the theater as saying some of the attackers had fired from a side door.

"They have grenades and they have guns," Moscow city police chief spokesman Valery Gribakin said.

Russia has fought on and off for more than eight years to quell a Chechen nationalist revolt for independence in the North Caucasus territory that costs lives daily among Russian troops and civilians there.

NO STORMING

As two prominent figures in Moscow's Chechen community began efforts to set up negotiations with the attackers, officials played down speculation that heavily armed security forces surrounding the building would try to take it by storm.

"Storming of the building will not be carried out at the initiative of the Russian side if the "terrorists" do not undertake actions to kill large numbers of hostages," Gennady Gutkov, a parliamentary security committee member said.

Putin won immediate sympathy for his plight from Washington and other Western powers with whom he has grown close since he threw Moscow's backing behind the global war on terrorism following last year's September 11 attacks in the United States.

Western criticism of Moscow's hard line in Chechnya -- including widespread allegations of human rights abuses -- has been muted since September 11. The White House condemned the latest hostage seizure and offered help if needed.

Hostage Shkolnikova said there had been no casualties when the attackers stormed into the theater, a featureless modern building known as the former House of Culture.

The group released up to 20 children immediately from among the audience as well as some Muslims and batches of hostages were released at regular intervals throughout the night. Police said 400-700 remained hostage, including several foreigners.

RUSSIAN POLICEMAN KILLED AT HOSTAGE SCENE

According to the Chechen nationalist Internet website kavkaz.org, a Russian policeman was shot dead by the attackers. The report added that the policeman approached the theatre's central entrance at around 6:00 am Moscow time (0200 GMT) on Thursday, pretending to be drunk and demanding to be let in.

"After several warnings, the mujahideen (Islamic fighters) shot the policeman," kavkaz.org said.

CRISIS MEETING

Putin called in senior security chiefs and Prime Minister Mikhail Kasyanov for crisis talks in the Kremlin.

Putin is due in Mexico at the weekend for an Asia-Pacific summit that should also take in talks with President Bush on Iraq and North Korea.

Early on Thursday, officials reported varying degrees of success for the two negotiators -- Aslanbek Aslakhanov, the deputy who represents Chechnya in the State Duma lower house of parliament, and Ruslan Khasbulatov, a former parliament speaker.

"The attackers are refusing to have contact. When we have had contact they say their leaders are resting," said parliamentary deputy Yuli Rybakov, who is involved in handling the crisis.

An anguished hostage, speaking by mobile telephone from inside the theater, pleaded live on NTV television for the security forces not to storm the building.

"Please to not start storming. There are a lot of explosives. Don't open fire on them. I am very scared, I ask you please do not start attacking," said Tatyana Solnyshkina.

Outside, crowds of anxious relatives waited for news.

The Moscow hostage-taking incident is the most audacious Chechen attack since the first Chechen war of 1994 to 1996.

In 1995 some 120 people were killed after rebels seized a hospital in the southern Russian town of Budennovsk. In 1996 a Chechen group took more than 2,000 people hostage in a raid on the neighboring Dagestani town of Kizlyar.

In Berlin, a Foreign Ministry spokesman said three Germans were being held. The British Foreign Office was checking on the fate of at least three Britons thought to have been at the show

PHOTO CAPTION

A pregnant hostage released by hijackers leaves the theatre in Moscow in which about 40 Chechen fighters are holding hundreds of theatre-goers hostage, October 24, 2002. Some hostages who were freed said the group, including several women with some wearing masks and strapped with explosives, burst into the theatre in southeast Moscow firing shots into the ceiling and shouting 'Stop the war in Chechnya.' (Sergei Karpukhin/Reuter