By Richard Lough
ANTANANARIVO (Reuters) - Madagascar's opposition leader Andry Rajoelina rejected on Monday an offer by President Marc Ravalomanana to hold a referendum as a way to end the Indian Ocean island's political crisis.
"The referendum is already done. The people have already expressed themselves," he told national television.
"The resignation of Ravalomanana is the solution."
Raising tensions in a crisis that is crippling the Indian Ocean island's economy and has killed at least 135 people, explosions were heard before dawn near the presidential palace.
Witnesses and officials spoke of two or three blasts about a mile from the palace. But there was no indication they represented an attack on Ravalomanana, who is hunkered down in the whitewashed colonial-era chateau, with supporters milling round outside vowing to repel any opposition assault.
"There were two loud explosions at around 3 a.m., but I don't know where they came from. They were strong enough to shake the house," said local resident Solanje Rasoamanana.
A colonel within the presidential guard told Reuters three shells were fired, landing on a bypass near the palace.
"This was to intimidate the mass of supporters," he said.
A statement read out on Radio Mada, owned by the president, said five 4x4 vehicles with masked men inside were seen leaving after the explosions.
Rajoelina, 34, a former disc jockey who was sacked as Antananarivo's mayor earlier this year, says Ravalomanana is an autocrat running the island like a private company.
The president's supporters call Rajoelina a maverick and troublemaker bent on seizing power illegally.
MEDIATION EFFORT
A spokesman for the army, which has leaned away from Ravalomanana but not definitively allied with Rajoelina, said Monday's pre-dawn blasts had nothing to do with them.
The African Union was holding an emergency meeting on Madagascar on Monday. It is urging dialogue.
The United Nations has sent Tiebile Drame, Mali's former foreign minister, to mediate on its behalf.
"The way out of this crisis lies with the Malagasy people," he told Reuters. "Madagascar has to turn its back on the cycle of violence. The only possible way of reaching a solution is through dialogue and democracy."
Drame called for a unity government. "At the end of this crisis, it (Madagascar) will need a government of consensus that should go beyond Ravalomanana and Rajoelina."
Madagascar's army has remained traditionally neutral during periods of political volatility since independence from France in 1960. Diplomats are urging it to stay that way.
Colonel Andre Ndriarijaona -- who led a mutiny and ousted the army chief -- told Reuters a plebiscite would take too long.
"The country can not afford to wait under such difficult circumstances. Perhaps it offers a democratic solution, but my worry is the chaos in the meantime," he said.
One analyst said the president's offer was "an astute political move" that is designed to buy time.
"The president is backed into a corner and needs the crisis to dissipate. He could delay the referendum for months and the situation might have changed. So I see it as a delaying tactic," said Edward George of the Economist Intelligence Unit.
While Rajoelina has tapped into widespread public discontent, especially with high levels of poverty, many inhabitants are fed up with the disruption this year's protests and unrest have brought to their lives and the local economy.
The $390 million-a-year (275 million pound) tourism sector is nosediving, and foreign investors in the important mining and oil exploration sectors are watching events nervously.
(Additional reporting by Alain Iloniaina)