MADRID (REUTER) - The moderate Basque allies of Spain`s ruling party asked the government to negotiate an end to violence with the Basque separatist group ETA. The Basque National Party (PNV) proposed the initiative in a new document unveiled against a backdrop of escalating violence in the Basque country. Late on Sunday night, a powerful car bomb in the Basque city of San Sebastian damaged businesses but caused no injuries. Last Thursday, an unidentified gunman shot dead a bicycle merchant in the city and the government blamed ETA. PNV leader Xabier Arzalluz told reporters his party was calling for peace moves but did not suggest specific actions. The conservative Popular Party government, headed by Prime Minister Jose Maria Aznar, has rejected any talks with ETA until the group renounces violence and lays down its arms. Arzalluz said he was sceptical the initiative would meet with success. The PNV, which supports the government in key parliamentary votes, has traditionally advocated negotiations with ETA. Spanish police arrested two HB leaders in Pamplona on Monday after they ignored a summons by the Supreme Court to answer charges of promoting violence. The court had summoned the entire HB leadership to appear and face charges its members edited and distributed a pro-ETA videotape during Spain`s general election campaign last March. The group has said it does not recognise the court`s authority. ETA (Basque Homeland and Freedom) has killed about 800 people since 1968 in a campaign for independence.