By Bazuki Muhammad

FELDA SAHABAT, Malaysia (Reuters) - Malaysian security forces said they had killed 13 suspected Philippine militants as they expanded their hunt for an elusive armed group on Borneo island on Wednesday, a day after an assault with fighter jets, mortars and hundreds of troops.

The nearly month-long confrontation in Sabah state, in Malaysia's part of Borneo, was sparked when the armed group of about 200 sailed from the nearby southern Philippines to press an ancient claim to the resource-rich region.

At least 40 people have been killed, including eight Malaysian policemen, raising concerns of broader insecurity ahead of elections in Malaysia.

"The total is 13. There could be more," Malaysian Defence Minister Zahid Hamidi told reporters at a media center set up at a palm oil plantation called Felda Sahabat.

Zahid, who produced what he described as pictures of some of the dead militants, said Malaysian forces had suffered no fresh casualties since the assault was launched on Tuesday.

Malaysian police warned residents to be on alert for members of the group who had likely escaped into plantations that dominate the coastal area and who could be posing as farmers.

"The mopping and searching will cover a wider area given there are signs the intruders moved to another location," police inspector-general Ismail Omar told reporters.

"The security forces are tracking down their movements and will take the appropriate action."

FIGHTERS WILL NOT RETURN HOME: SPOKESMAN

Allies of the group in Manila said they had been in telephone contact with Raja Muda Agbimuddin Kiram, the militants' leader and the brother of the self-proclaimed sultan, who said the group had split up to avoid detection.

Abraham Idjirani, a spokesman for the group, told Reuters that 10 of the sultan's followers had died, with 10 captured and four wounded.

"They will not come home and would rather die fighting if cornered," he said of the remaining followers in Sabah.

The family in Manila also said more followers had arrived to reinforce the group, a journey between the Southeast Asian neighbors that takes around an hour by speedboat.

Army trucks carrying dozens of soldiers continued to enter the village of Kampung Tanduo where the group had originally been holed up. A helicopter hovered overhead.

Fighter jets bombed the group's camp in the Felda Sahabat plantation early on Tuesday after Malaysian Prime Minister Najib Razak said his patience had run out. Philippine officials had urged the group to return home.

The group says it represents the now defunct sultanate of Sulu in the southern Philippines and demands recognition and payment from Malaysia for their claim as rightful owners of Sabah.

The security headache could prompt Najib to delay an election that must be held by June, adding to nervousness among investors over what could be the country's closest ever polls.

The insecurity has disrupted operations in Sabah's huge palm oil industry. Prolonged trouble could dampen growing investor interest in energy and infrastructure projects in the state, although the main oil fields are far from the standoff.

(Additional reporting by Niluksi Koswanage and Siva Sithraputhran in Kuala Lumpur, Angie Teo in Felda Sahabat and Manuel Mogato and Rosemarie Francisco in Manila; Writing by Stuart Grudgings; Editing by Ron Popeski)