By Mohammad Hamed

YAQOUBI, Afghanistan, Sept 5 (Reuters) - Faces wrapped with black scarves and AK-47s slung across their shoulders, Taliban fighters looked on sternly as villagers buried their dead from this week's NATO air strike in northern Afghanistan.

Weeping and reciting prayers, villagers knelt in front of about 50 graves dug outside Yaqoubi, a scattering of mud-brick huts near the site where Afghan officials say a NATO bombing killed scores of people, many of them civilians.

They paid little attention to groups of Taliban men who watched the funeral service from afar.

The fighters' presence underlined the Taliban's tightening grip in once-quiet parts of northern Afghanistan at a time when U.S.-led forces are battling to contain an increasingly aggressive insurgency mainly centred in the south and east.

"We will take revenge. A lot of innocent people were killed here," one of the Taliban fighters, only his eyes left uncovered by a thick scarf, said at the funeral.

In an incident that has fuelled anger among local villagers, U.S. fighter jets called in by German troops struck a pair of fuel trucks hijacked by the Taliban on Friday.

Locals say bombs hit the area when 200 people from five nearby villages had gathered to siphon off the fuel which they thought had been abandoned by the Taliban.

"Every family around here has victims," said Sahar Gul, a 54-year-old village elder from Yaqoubi. "There are entire families that have been destroyed."

As a white funeral flag flapped in the dusty wind, Amidullah, a boy of 13, wept as he stared at the sandy grave of his father.

"I am the only survivor in the family," he said. "My father was martyred, my brother was martyred, my uncle was martyred and two of my cousins were martyred."

Village elders said 50 people were buried in Yaqoubi and 70 more in nearby villages, although the precise death toll may never be known.

An official with the International Committee of the Red Cross said it was close to impossible to assess the death toll because many bodies were believed to have been incinerated.

People who travelled to the memorial service on Saturday from the regional centre of Kunduz said the Taliban had set up road blocks and searched many cars in a gesture of defiance.

Kunduz province Governor Mohammad Omar blamed the villagers for allowing the Taliban to operate in their area.

"Villagers paid a price for helping and sheltering the insurgents," he told Reuters.

Villagers interviewed by Reuters said the Taliban were not welcome. They lamented the fighters' presence but were powerless to keep them away.

"We are ordinary people," said one villager. "We are not Taliban." (Writing by Maria Golovnina; Editing by Peter Graff and Jon Hemming)

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