Gunmen kill 2 soldiers at south Lebanon camp

AIN AL-HILWEH, Lebanon, June 4 (Reuters) Islamist gunmen killed two Lebanese soldiers at a Palestinian refugee camp in south Lebanon today, the first fatal spillover from fighting between the army and al Qaeda-inspired fighters in the north.

Two militants of the Jund al-Sham group were also killed in the clash on the edge of the big Ain al-Hilweh camp near the southern port city of Sidon, security and military sources said.

Three soldiers and two civilians were wounded in intermittent clashes yesterday night and today.

A Palestinian political source said the spread of fighting to the south had forced leaders to begin contacts to seek a mediated settlement of the clashes between the army and militants at Nahr al-Bared camp in north Lebanon.

''What happened at Ain al-Hilweh gave a very dangerous indication of where things will go if Nahr al-Bared battles continue,'' said the source.

The army has been battling Sunni Islamist militants of the Fatah al-Islam group in the north since May 20. At least 114 people have been killed in the fighting -- Lebanon's worst internal violence since the 1975-1990 civil war.

A bomb exploded next to an empty bus in a Christian area in east Beirut today, wounding seven people, said a military source.

Fatah al-Islam was accused of blowing up two buses in February in a Christian area near Beirut. Three people died.

A Lebanese political source said military action might slacken at Nahr al-Bared. ''It has become clear that it won't be easy to finish the Nahr al-Bared situation quickly through military means,'' said the source.

The violence has further jolted stability in Lebanon, where a political standoff between the Western-backed government and Syria's Lebanese allies has paralysed state institutions since last year's war between Israel and Hezbollah guerrillas.

Hundreds of civilians fled Ain al-Hilweh, a sprawling shanty town perched on a hillside above Sidon, 40 km south of Beirut.

Palestinian President Mahmoud Abbas's Fatah faction dominates the camp, but small Islamist groups have a foothold there and in several other refugee camps in Lebanon.

Ain al-Hilweh is the first Palestinian camp in Lebanon in which fighting has erupted apart from Nahr al-Bared.

GLOBAL JIHAD Few people in the camps back Fatah al-Islam, whose pro-al Qaeda ideology of global jihad is at odds with both the Islamist Hamas movement and the secular ideas of Fatah and leftist groups.

Palestinian factions held emergency talks with the army command in Sidon to ease tension. Jund al-Sham fighters then ceded their positions to gunmen from other Islamist groups.

''The army asked the Palestinian factions to seek a halt to attacks on the army, saying that if they don't stop, it would act firmly,'' said a Palestinian source who attended the meeting.

Some 500 Palestinian and Lebanese civilians who had fled the fighting took refuge at the municipality compound in Sidon.

''We fear what happened at Nahr al-Bared will happen here,'' said Hani Bernawi, 31. ''They (Jund al-Sham) are just a gang who came here to mess things up and destroy our security.'' Jund al-Sham, made up of a few dozen Palestinian and Lebanese militants, has sided with Fatah al-Islam, though they do not appear to have organisational links.

Its fighters attacked the army just hours after a Fatah al-Islam commander named Abu Riyadh, who had previously belonged to Jund al-Sham, was killed in Nahr al-Bared.

Machinegun fire and explosions echoed sporadically from Nahr al-Bared, where outgunned Fatah al-Islam fighters have refused to surrender. But the fighting was less intense than in the previous three days of army assaults on militant positions.

The Lebanese government sees itself at war with terrorists backed by Damascus, which rejects the charge. Secular Syria says Fatah al-Islam's leaders are on its wanted list and that such groups threaten its own security.

Twelve soldiers have been killed in Nahr al-Bared since Friday, bringing the military death toll there to 46, while more than 20 other people -- militants and civilians -- have been killed. Fatah al-Islam says 36 of its fighters have died.

About 27,000 of the camp's 40,000 residents have fled.

The army has not entered the camp's official boundaries, but has captured militants' positions on its outskirts. A 1969 agreement prevents the army from entering Lebanon's 12 Palestinian camps, home to 400,000 refugees.

REUTERS AM BST0025