By Molly Moore
Washington Post Foreign Service
Wednesday, September 4 1996; Page A18

Zapatista rebels in the southern state of Chiapas have broken off peace talks with the Mexican government in a move that appeared designed to increase pressure on an administration grappling with the emergence of a second guerrilla group.

The Zapatistas, who led a 12-day rebellion in January 1994, said in a letter to the government Monday that they are halting the 16-month-long peace negotiation because of "arrogance" of the government and accused it of using the new rebel uprising as an excuse to crack down on Zapatista supporters.

The Zapatistas -- who have walked out of the slow-moving peace talks numerous times -- also seemed to be trying to take advantage of the government's vulnerability in the aftermath of synchronized attacks in four states last week by the new guerrilla organization.

Although the Zapatistas and the new group, the People's Revolutionary Army, or EPR, are making similar demands for the poor, the Zapatista leader known as Subcomandante Marcos has criticized the use of violence. "We are different from the EPR, but we are not against them," Marcos said in the letter to President Ernesto Zedillo announcing withdrawal from the peace process.

Members of the new group reportedly set up a roadblock and distributed literature in Chiapas last week during its coordinated attacks.

While the Zapatistas launched a 12-day rebellion against the government that took an estimated 145 lives, the new unit's tactics have been to ambush government targets since they appeared two months ago. Political leaders and analysts have said they believe the new organization is better financed and armed than the Zapatistas were.

Predictions by many economic analysts that the guerrilla attacks would provoke greater political rather than economic fallout were partially confirmed today when the Standard & Poor's financial rating service raised Mexico's financial outlook from "negative" to "stable."

"The outlook revision reflects Mexico's reduced vulnerability to potential political and external shocks and the recovery of macro-economic stability since last year," the service said.

The death toll from last week's guerrilla violence has climbed to 17 people, including two additional bodies that have been discovered. The government of the southern Pacific coast state of Oaxaca said the corpse of a sailor who disappeared during a rebel attack on a naval barracks in the resort town of Huatulco on Aug. 28 was dug up at an abandoned guerrilla camp on Sunday.

"His body showed clear signs of having been tortured and hanged," the government said Monday.

Security chiefs and state government officials are conducting meetings this week to organize emergency responses to possible future attacks. The rebels have struck near two popular beach resorts, Acapulco and the newer Huatulco, and have threatened to have "a presence" in the Yucatan resort of Cancun soon.

A senior government official, in a meeting with foreign reporters today, described the People's Revolutionary Army as "an urban terrorist organization" more similar to European "terror" groups than the peasant-based guerrillas of Latin America. The official added that the group "has great mobility. . . . This is what makes tracking it down difficult."