"Our main task is to save the life and health of those who have ended up as hostages," Putin said in nationally televised comments from the Kremlin. "All the actions of our forces ... will be devoted to solving this task," a stern-looking Putin said during a meeting with visiting Jordanian King Abdullah.
Putin described the seizure as "horrifying because among the hostages are children" and because it could upset the delicate balance of religious and national groups in the turbulent Caucasus region.
Earlier, Valery Andreyev, head of the FSB security service in North Ossetia province, told journalists: "There is no question at the moment of opting for force. There will be a lengthy and tense process of negotiation."
The crisis, in which the gunmen have used tactics bearing the hallmarks of past Chechen rebel attacks, gives Putin one of the hardest choices in his 4-1/2 years in the Kremlin. Should he risk a slaughter by following his past practice of sending in troops to end such sieges, or try to save the children by breaking a long-held vow not to negotiate with "terrorists"?
Throughout the morning, rifle shots rang out and the occasional blast of a grenade echoed among apartment blocks.
The hostage-taking was the latest in a spate of deadly attacks the government believes are the work of Chechen separatists. Putin rushed back from a Black Sea holiday to Moscow on Wednesday and cancelled a planned trip to Turkey. "Their (the hostage-takers') demands must be fulfilled, whatever they want. If they want to get away from here, they should be given a free way out," said Soslan Paguyev whose daughter and some friends were among those held.
The gang spoke by telephone in the morning with a well-known paediatrician, Lev Roshal, who helped negotiate the release of children during the deadly Moscow theatre siege in 2002. There was no word on the progress of the talks. Previous hostage dramas in Russia have ended with big loss of life.
Officials said the gang had threatened to kill 50 children for each of their comrades killed. "President Putin faces the most difficult decision in the whole of his presidency," the Izvestia daily said in an editorial. "It is obvious now that the main threat to president comes ... from terrorism."
The armed gang killed seven people when they broke into the school and herded pupils, parents and teachers into a gym. The gunmen have said they would talk only to Dr Roshal and regional leaders – apparently to press their demands for the release of rebels held by authorities.
A Moscow-based Iranian journalist said he had been asked by the FSB to help in negotiations. "They've told me they want me to do it. Of course, I am going to do it. I am just waiting for further instructions," the reporter, Abdallah Isa of Iran's Al-Alam television, told Reuters by telephone from Beslan.
One official said they had rejected offers to deliver food and water, but had assured Roshal the children were fine. Across the border in Chechnya itself, two Russian soldiers were killed and seven people were wounded when their convoy was blown up by a mine just south of the regional capital, Grozny, Interfax news agency said.
The government believes they are behind a wave a violence in Russia, including the almost simultaneous downing of two passenger planes last week, killing 90 people. On Tuesday, a suicide bomber blew herself up in central Moscow, taking nine lives with her own.
It was unclear who the latest attackers were and Chechen separatist leaders have denied any links. Initial reports said the attackers had demanded the release of insurgents jailed after a June raid in neighbouring Ingushetia, in which 98 people died.
Rebels staged a similar attack on the Chechen capital Grozny just a week before a candidate hand-picked by the Kremlin was elected regional president. "The authors of the terrorist attacks wanted to ... make Russians feel the 'Chechen hand' can reach them in a bus, on the metro, in a plane and in a busy street – anywhere," Kommersant daily wrote.
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