Prime Minister Recep Tayyip Erdogan, Defence Minister Vecdi Gonul, Interior Minister Besir Atalay as well as senior military commanders and the head of the intelligence agency attended the talks at the presidential palace, the Anatolia news agency said.

Army chief Ilker Basbug was also expected to join the talks after a conference in Canakkale, northwestern Turkey, the agency said.

The military suffered most of its weekend casualties when fighters of the separatist Kurdistan Workers Party (PKK) attacked a border unit at the Iraqi frontier early Saturday, prompting a Turkish air raid on rebel hideouts in northern Iraq. At least 12 rebels were also killed, the army said.

Erdogan condemned the PKK's "cowardly" attacks and said Turkey was ready to "pay the price" to "annihilate" the PKK, listed as a terrorist group by Ankara and much of the international community.

The attack turned up pressure on the government, already scrambling to save a fragile initiative to boost Kurdish freedoms and investment in the impoverished southeast in a bid to discourage Kurdish separatism.

The so-called "Kurdish opening" announced last year has already faltered amid an opposition outcry that Ankara is bowing to the PKK, as well as persistent rebel attacks and a judicial onslaught on Kurdish activists.

The violence also cast a shadow on Turkish efforts to mend fences with the Iraqi Kurds, whom Ankara had often accused of tolerating and even aiding the PKK in their autonomous region in northern Iraq.

Iraqi Kurdish officials said Sunday that Turkish troops launched a ground incursion to chase PKK rebels, advancing 10 kilometres (six miles) into Iraqi territory, an operation the Turkish army has not confirmed.

Iraqi Foreign Minister Hoshyar Zebari, himself a Kurd, criticised the "unilateral" action and called on Erdogan's government to return to peaceful efforts to end to the 26-year Kurdish conflict in Turkey.

Iraqi Kurdish leader Massud Barzani had paid a landmark visit to Ankara earlier this month pledging "all efforts" to curb the rebels.

The PKK took up arms for self-rule in Turkey's Kurdish-majority southeast in 1984, sparking a conflict that has cost about 45,000 lives.