onary Movement (MRTA) gunmen refused to bow to pressure to release their captives, Fujimori insisted on Monday that the hostage crisis was nothing more that an isolated incident. In six years of power, Fujimori virtually defeated leftist guerrillas waging armed conflict since 1980 and transformed the Peruvian economy along free-market lines. Before the guerrilla movements were suppressed, an estimated 30,000 people were killed after 1980 in conflicts involving the government against the MRTA and larger Maoist Shining Path movements. But the spectacular Dec. 17 takeover of the Japanese ambassador`s residence by MRTA rebels claiming to represent the poor, revived memories of Peru`s past and threatened to set back Fujimori`s achievements. The government and MRTA rebels holding the diplomatic residence remained deadlocked on Tuesday as the 73 hostages spent their 35th day under the gun. Both sides said they were ready to talk but a face-to-face meeting was on hold because the goverment ruled out considering the MRTA`s main demand: the release of jailed comrades. There has been little movement at the site since Friday when the MRTA freed a top security force chief for health reasons. It was the first hostage release in 17 days. Fujimori said the hostage crisis would cause a minimum of damage to the nation. The remaining hostages inside the residence included about two dozen Japanese businessmen and diplomats, Peruvian government and security force officials, two ambassadors, and Fujimori`s younger brother, Pedro.