By Guled Mohamed

ARBIS, Somalia, July 24 (Reuters) - Abdi Mahad says he misses school in Mogadishu, but is much happier sleeping outside a city where peace talks have attracted enough mortar blasts and gunshots to send 10,000 people fleeing in the past week alone.

The United Nations says the violence surrounding a national reconciliation conference, billed by diplomats as the interim government's last best hope at boosting its legitimacy, has sparked yet another mass exodus from the seaside capital.

Mahad, who fled from Towfiq district in north Mogadishu, is among those living near the conference venue who are caught up in an insurgency by militant Islamists vowing to derail the conference and attack the government until its Ethiopian backers leave.

"We fled from Mogadishu last week," Mahad told Reuters, surrounded by dozens of malnourished teens in a squalid camp made of sticks and tattered cloths in Arbis, 23 km (14 miles) west of the capital Mogadishu.

"I miss school. We lack food, shelter and drinking water but we are much safer here from the mortars and gun battles. We fled from battles between Ethiopian troops and the Muqawama," he said referring to the Islamist insurgents by their local name.

The scene is typical around Somalia, where the U.N. refugee agency UNHCR estimates at least 250,000 people are living in makeshift camps or squatting with limited access to food, water and medicine.

The worst battles since Somalia's 1991 civil war occurred in March and April, and sent an estimated 400,000 out of the city in fear, straining limited resources elsewhere.

As has been the case in Somalia since warlords ousted dictator Mohamed Siad Barre in 1991, civilians often bear the brunt of the anarchy and violence that has characterised the Horn of Africa nation since then.

Jawahir Ahmed, a native of Arbis village, says hundreds are arriving daily: "They need food, medicines, shelter and utensils to cook. There is nowhere for them to go. These people will never go back."

Security in Mogadishu has worsened since peace talks started a week ago and for the first time since early June, more people have left the Somali capital than returned, UNHCR said.

Reconciling clan rivalries is a key aim of the meeting which the government -- the 14th attempt at restoring central rule since 1991 -- hopes will secure a workable peace.

The reconciliation meeting opened in Mogadishu on July 15 but was marred by mortar bombs attacks near the site.

Flanked by his family, Ali Mohamed Hayo said they are starving.

"We were afraid Ethiopian troops staying close to our house would be attacked and bring problems to us. We have nothing to eat. No one cares for us," he said, sitting outside his one-room house built of sticks.

Seated in a queue of hundreds of women waiting to receive food from a local aid group, Katro Abdullahi, 24, says she sees no peace in the near future.

"I expect nothing from the peace talks because it has been organised at a time when we were running from fighting. They should stop the battles first and then talk," the mother of four said.

The young student Mahad has no dream of going to a city that has long been synonymous with violence and death.

"I'm happier here. I now sleep well at night without worries," he said.

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