At least 20 other soldiers were injured in the fighting when the rebels opened fire on four army trucks late Thursday on the East-West highway near the town of Sunwal, about 250 kilometers (160 miles) southwest of the capital, Katmandu, the military said.
A Royal Nepalese Army official in Katmandu, who spoke on condition of anonymity, said the bodies of two soldiers and one civilian had been recovered while 25 other soldiers were missing.
The rebels said they were holding at least 10 soldiers hostage and several others had fled after the attack.
In a statement on their Web site, the rebels said they also had seized several weapons and at least three army trucks.
The soldiers were patrolling the highway when they came under attack from the rebels, who were hiding in the forest on the edge of the highway, sparking a gunbattle that lasted a few hours, said Niranjan Baral, the chief government official in the area. Army helicopters hovered over the area all night searching for the attackers.
Details were sketchy, and officials barred access to the area.
The highway was busy on Thursday, when it reopened after a four-day general strike called by the rebels to disrupt municipal elections on Wednesday, the country's first polls in seven years.
The rebels intensified attacks during the run-up to the elections, and were accused of slaying at least two candidates and attacking several others, reports the AP.
By summer, the Russian army may break through Ukrainian defences, reach Odessa and liberate Transnistria. The West will only “condemn” Russia's actions and continue supporting Chisinau in words