  We present a deep (~5.8 days) 0.3-2 keV high-resolution spectrum of NGC1365,
collected with the reflection grating spectrometer (RGS) on board XMM-Newton.
The spectrum is dominated by strong recombination lines of He- and H-like
transitions from carbon to silicon, as well as by L transitions from FeXVII.
The continuum is strong, especially in the 10 to 20 Angstrom, range. Formal
fits require two optically thin, collisionally ionised plasma components, with
temperatures ~300 and ~640 eV. However, they leave the bulk of the forbidden
components of the He-alpha OVII and NVI triplets unaccounted for. These
features can be explained as being produced by photoionised gas. NGC1365 is
therefore the first obscured AGN, whose high-resolution X-ray spectrum requires
both collisional ionisation and photoionisation. The relative weakness of
photoionisation does not stem from the intrinsic weakness of its AGN, whose
X-ray luminosity is ~10^{42} erg/s. We suggest that it may instead come from
the line-of-sight from the active nucleus to the NLR being blocked by optically
thick matter in the broad line region, at the same time responsible for the
large observed variation of the column density obscuring the X-ray active
nucleus. Alternatively, NGC1365 could host a remarkably luminous nuclear
starburst when compared to the AGN accretion power [abriged].
