(Update with State Department spokesman)

By Ysain Bu'ul

BAIDOA, Somalia, April 7 (Reuters) - The top U.S. diplomat for Africa met with officials of Somalia's interim government on Saturday to urge them to open up the political process to all Somalis who eschew violence and extremism and clear the way for a reconciliation conference in Mogadishu.

U.S. Assistant Secretary of State for African Affairs Jendayi Frazer met with President Abdullahi Yusuf, Prime Minister Ali Mohamed and parliamentary leaders, urging them to foster an inclusive political process.

Frazer's arrival under heavy security marked the first time a high-ranking U.S. official has visited Somalia since 1994, when Washington pulled out of a disastrous peacekeeping mission after the downing of two helicopters and the deaths of 18 American soldiers.

The visit came on the sixth day of a truce to end some of the heaviest fighting in the capital Mogadishu in 15 years.

"She and all of the interlocutors she met with agreed that the reconciliation process should be open to all Somalis who eschew violence, extremism and terrorism," said State Department spokesman Sean McCormack in Washington.

"She made clear U.S. views that the best way to isolate terrorists and extremists is through an inclusive political process based on the Transitional Federal Charter."

Frazer told Somali officials the United States was moving ahead with disbursement of $40 million in aid and had asked Congress for an additional $60 million, McCormack said.

The aid will be used to support development and security needs, to assist in the deployment of the African Union Mission in Somalia, or AMISOM stabilization force, and to provide humanitarian assistance.

The recent fighting in Mogadishu was sparked by an offensive intended to wipe out a persistent insurgency before an April 16 national reconciliation conference that is likely to be delayed.

Frazer told reporters in Baidoa her message to everyone she met was to "stop the violence now and have a permanent cease-fire mechanism in place."

A joint offensive by Somali government troops and allied Ethiopian forces led to entire pro-insurgent neighborhoods being demolished with rockets, tanks and artillery from March 29-April 1, in fighting that killed at least 400 people and wounded about 1,000.

NATION IN ANARCHY

Despite nearly a week with only sporadic gunfire -- the norm in Mogadishu -- many doubt the security situation will improve enough in time for the start of the conference, which is designed to bring together all sectors of Somali society.

Diplomats see the meeting as the government's only chance to gain the legitimacy it needs to lead a nation which has been in anarchy since the 1991 ousting of dictator Mohamed Siad Barre.

"The government has a gigantic challenge, and that challenge is that there are those elements that are intent on destroying any dialogue and reconciliation," Frazer told reporters after returning to the Kenyan capital Nairobi.

Frazer said Washington still believed three top al Qaeda suspects and three Somali associates were still in Somalia.

Attacks by defeated Islamists trained in insurgency and gunmen from Mogadishu's dominant Hawiye clan, and the government's responses have forced 124,000 residents -- a tenth of Mogadishu's population -- to flee since February.

Indiscriminate shelling in last week's assault prompted a European Union warning of possible war crimes by Ethiopian and Somali troops. Ethiopia and Somalia deny wrongdoing.

"I think that everybody used excessive force when you hear the number killed," Frazer said, but blamed insurgents for starting the fight with mortar attacks from populated areas.

Somalia's interim government is the 14th attempt to establish central rule in the Horn of Africa nation since 1991. (Additional reporting by Bryson Hull in Nairobi, Sahal Abdulle in Mogadishu and David Lawder in Washington)

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