The negotiations moved closer to an agreement, with local tribal leaders pledging to the captors that they will ask the Yemeni government to free a jailed relative, as demanded by the tribesmen, in exchange for the Japanese engineer and his driver, the sources said.

But the talks fell short of reaching a final settlement as one of the captors strongly opposes the content of the accord, insisting the relative should be released first, they said.

An employee of a Tokyo-based consultancy, the 63-year-old Japanese engineer has been in based in Sanaa for more than a year in connection with a Japan International Cooperation Agency's aid project to build schools.

He and his Yemeni driver were ambushed on their way to a school construction site in the nearby town of Arhab on Sunday.

The captors are demanding the release of the 22-year-old male relative who has been jailed for four years in exchange for the two captives.

The relative reportedly has a history of involvement in the armed struggle against the United States in Iraq and is suspected by the Yemeni Interior Ministry of having links to the al-Qaida terrorist network.