* Fighting kills at least 20 in northern Mogadishu

* Somali foreign minister hopes for stronger AU mandate

* AU leaders in Libya debate beefing up peacekeeping force

By Abdi Guled

MOGADISHU, July 2 (Reuters) - Heavy fighting in the Somali capital killed at least 20 people on Thursday, the second day of fierce clashes as government forces tried to drive hardline Islamists out of their Mogadishu bases.

Al Qaeda-linked fighters in Somalia's al Shabaab rebel group are battling to oust President Sheikh Sharif Ahmed, himself a former Islamist insurgent who joined a peace process last year.

Al Shabaab and allied fighters control much of southern and central Somalia and have boxed the government and 4,300 African Union peacekeepers into a few blocks of Mogadishu.

"The streets were horrific," ambulance service official Ali Muse told Reuters. "We've transported 20 dead bodies and 55 injured in the latest fighting."

Western nations and Somalia's neighbours worry that if the rebels succeed in toppling Ahmed, the Horn of Africa nation will become a safe haven for al Qaeda training camps, and hardline Islamists will destabilise the region.

At an African Union summit in Libya, AU leaders discussed beefing up their force and whether to give the troops a stronger mandate to take the fight to the rebels.

At present, the troops from Uganda and Burundi are largely confined to their bases and protect key sites such as the presidential palace, airport and seaport.

TOUGHER MANDATE?

The African Union had planned to send a force of 8,000 but pledges of more troops for the AMISOM force have so far failed to result in more boots on the ground.

Uganda and Burundi have said they are ready to send another battalion each but financial and logistical hurdles have delayed any deployment. Nigeria has mooted sending troops and AU officials say Burkina Faso and Malawi may also send soldiers.

"There are offers of troops," said Somali Foreign Minister Mohamed Abdullahi Omaar. "Two are firm offers and two are at a final stage ... each would be a battalion, roughly 800."

"All the troops would be under AMISOM and the mandate of the African Union. Implementation is as quickly as possible," he told Reuters on the sidelines of the AU summit in Libya.

Officials said strengthening the AU force's mandate was very high on the agenda at the summit, which is expected to issue a resolution strongly supporting the Somali government's efforts to defeat the rebels.

"That is an issue that is under very serious consideration and it has the full support of the (AU) Commission to go ahead," said Omaar.

"The rules of engagement, that is what we are talking about, enabling AMISOM to better protect itself and to provide enhanced training ... and further support to the national security forces of Somalia." (Additional reporting by Christian Lowe in Sirte; writing by David Clarke; editing by Tim Pearce)

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