(Adds details on Iraqi delegation, paragraphs 13-14)

By Evren Mesci

ANKARA, Oct 25 (Reuters) - President Abdullah Gul warned Kurdish rebels on Thursday that Turkey's patience was running out after Turkish forces said they had repelled a guerrilla attack near the Iraqi border.

Ankara has massed up to 100,000 troops along the mountainous border before a possible cross-border operation to crush about 3,000 rebels of the Kurdistan Workers Party (PKK) who launch attacks into Turkey from northern Iraq.

Iraqi, Turkish and U.S. diplomats have stepped up efforts to avert a large-scale Turkish incursion but Gul said NATO-member Turkey would not tolerate any more PKK attacks from Iraq.

"We are totally determined to take all necessary steps to end this threat ... Iraq should not be a source of threat for its neighbours," Gul told an economic conference in Ankara.

The United States is keen to avert a large-scale Turkish offensive in northern Iraq, fearing it would destabilise not only the most peaceful part of that country but potentially also the region as a whole.

"(The United States) may not want us to carry out a cross-border operation. But it is we who will decide whether to do one or not," Turkish Prime Minister Tayyip Erdogan told reporters during a visit to Romania.

Ankara has said it may impose economic sanctions on Iraq and the speaker of Iraq's parliament, Mahmoud Mashhadani, threatened on Thursday that Iraq would respond to any sanctions by cutting the oil supply to Turkey, state news agency Anatolian reported.

A pipeline from Iraq's Kirkuk oilfield to Turkey's Ceyhan port has pumped about 300,000 barrels per day since late August.

Public pressure on Turkish authorities to act has grown since rebels killed 12 soldiers last weekend. The PKK, branded a terrorist organisation by the United States and the European Union as well as Turkey, has said it captured eight soldiers.

"We are doing all we can, working with the Iraqi and Turkish governments to make sure the hostages are freed," Matthew Bryza, U.S. deputy assistant secretary for European and Eurasian affairs, said in a speech in Ankara.

WARPLANES

Turkish security sources have confirmed a series of sorties by warplanes and ground troops since Sunday into Iraqi territory, although Ankara has said it still hopes diplomacy can stave off the need for a full-scale ground invasion.

Turkish tanks and artillery helped beat off an attack by up to 40 PKK rebels late on Wednesday on a military post in Hakkari province near the border, security officials told Reuters.

F-16 fighter jets took off early on Thursday from the airport in Diyarbakir, the largest city of Turkey's mainly Kurdish southeast region. Their destination was not known.

An Iraqi team arrived in Ankara for talks due to start fully on Friday and which Turkish officials described as a last chance for diplomacy. Defence Minister General Abdel Qader Jassim, heading the delegation, told reporters they had come with concrete proposals.

But Turkish and Iraqi officials said Ankara had stopped the interior minister of northern Iraq's Kurdish administration, Kareem Sinjari, from coming -- potentially undermining the talks.

The Baghdad government has promised to shut down PKK offices but Ankara knows the central authorities in Iraq hold little sway in the autonomous Kurdish north.

Turkish newspapers on Thursday accused Iraqi and Iraqi Kurdish leaders of dishonesty and unreliability, saying they promised much but delivered virtually nothing.

They were especially angry with Iraqi President Jalal Talabani, a Kurd, whom senior Turkish officials quoted on Wednesday as saying Baghdad might hand over PKK rebels to Turkey. Talabani's office later denied he said this.

Secretary of State Condoleezza Rice is due to visit Turkey on Nov. 2 and 3, while Erdogan is expected to meet President George W. Bush in Washington on Nov. 5. (Additional reporting by Gareth Jones in Ankara, Thomas Grove in Uludere, Seyhmus Cakan in Diyarbakir and Ross Colvin in Baghdad)

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