YANGON (AFP) - Myanmar has reached a ceasefire deal with one of the war-torn country's major ethnic guerrilla groups, a mediator said Saturday, in the latest sign the new army-backed regime is reaching out to its opponents. The pact was signed Friday by representatives of the Shan State Army South and the local government in the northeastern state, Hla Maung Shwe, founder of the civil society group Myanmar Egress, who witnessed the agreement, told AFP. The was no immediate confirmation from the Myanmar government or the Shan State Army, but the Irrawaddy news website, run by journalists in exile, said the agreement in the Shan State capital of Taunggyi also included government assurances of economic development and joint efforts against drugs. It said the next step would be negotiations with the central government. The country formerly known as Burma has made a series of reformist moves in the past year -- releasing democracy leader Aung San Suu Kyi from house arrest, holding dialogue with the opposition and freeing some political prisoners. Elections last year brought a nominally civilian government to power, but it retains close links with the army. Civil war has wracked parts of the country since its independence in 1948, and an end to the conflicts, as well as alleged human rights abuses involving government troops, is a key demand of the international community. The Shan State Army South has been one of the biggest rebel forces still battling the government, with thousands of guerrilla fighters mostly stationed near the border with Thailand. Myanmar's leaders last month held peace talks near the Thai-Myanmar border with several ethnic groups fighting a long-running struggle for autonomy and rights, according to people involved. "They (the Shan State Army South) are the first group who signed the peace agreement among the five groups that we have met," Hla Maung Shwe said. He said Myanmar's Railways Minister Aung Min was present as a witness while the Shan rebel delegation was headed by Brigadier General Sai Luu. Mediators were also trying to reach peace agreements with the Karen National Union, the Kachin Independence Army (KIA), the Chin National Front and the Karenni National Progressive Party, he added. In eastern Karen State, armed rebels have been waging Myanmar's longest-running insurgency, battling the government since 1949, while fighting has also raged since June in northern Kachin State near the Chinese border. Myanmar state media reported on Thursday that peace talks had been held between the government and Kachin rebels, and the two sides had agreed to continue dialogue. "The KIA is the most difficult to reach a peace agreement with," Hla Maung Shwe said. US Secretary of State Hillary Clinton welcomed what she said were efforts by the regime to resolve ethnic conflicts after historic talks with the country's rulers in the capital Naypyidaw on Thursday. "But as long as the terrible violence continues in some of the world's longest-running internal conflicts, it will be difficult to begin a new chapter," she added. The mainly Buddhist Shan are the country's second-biggest ethnic group, accounting for about nine percent of the population, and Shan State covers a vast area of northeastern Myanmar.