(Recasts, raising army dTeath toll)

NAHR AL-BARED, Lebanon, July 24 (Reuters) - Islamist militants killed three Lebanese soldiers on Tuesday at a Palestinian refugee camp convulsed by more than nine weeks of fighting.

Security sources said two soldiers were killed by a mortar bomb and a third by a boobytrap explosion that buried him under the rubble of a collapsed structure in Nahr al-Bared camp.

Fatah al-Islam militants, still resisting the army's slow advance towards their last strongholds, fired two Katyusha rockets into areas outside the camp, but caused no casualties.

The army has now lost 120 dead since the conflict began on May 20. More than 81 militants and 41 civilians have also been killed. The battles have devastated densely populated neighbourhoods that had housed 40,000 refugees.

Fatah al-Islam, a well-armed group of Palestinian, Lebanese and foreign Arabs wedded to al Qaeda's militant ideology, broke away from a Syrian-backed Palestinian faction last year.

Nearly all Nahr al-Bared's residents have fled to other refugee camps in Lebanon. A U.N. official has said the cost of rebuilding will run into hundreds of millions of dollars.

Palestinian sources say about 1,000 civilians remain in Nahr al-Bared, including the families of Fatah al-Islam fighters.

The internal conflict, Lebanon's worst since the 1975-90 civil war, is sapping stability in a country already paralysed by a political crisis and shaken by fatal bombings, whose victims include two anti-Syrian politicians and six U.N. peacekeeping troops, in the past eight months.

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