(Adds deaths)

By Guled Mohamed

MOGADISHU, May 28 (Reuters) - At least two people died when gunmen threw grenades and opened fire on Ethiopian troops guarding a former Islamist base in the latest Iraq-style insurgent attack in Mogadishu, residents said on Monday.

The bodies of two dead civilians were later found at the scene of the overnight flare-up at an old pasta factory used by the Islamists then taken over by Ethiopian troops after their defeat at the New Year.

"The gunmen hurled two grenades," said resident Ali Sahal, who lives near the dilapidated building. "They then attacked them with automatic fire immediately after the explosion."

Another resident, who gave his name only as Abdinasir, said he had seen two corpses of civilians. "This is becoming a habit now," he said of the night-time attack and civilian toll.

Insurgents from the ousted militant Islamist movement have increasingly adopted the tactics of Iraqi guerrillas since the interim Somali government and its Ethiopian allies forced them out of Mogadishu in December after a brief war.

They have struck government buildings, convoys and Ugandan peacekeepers patrolling under an African Union mandate.

CHILDREN WOUNDED BY GRENADE

In a separate incident, seven children were wounded outside their school in the Gupta area of north Mogadishu over the weekend after one of them accidentally detonated a grenade.

"We were waiting to sit an examination when we were hurt," Abdikadir Mahamud, 16, said from his hospital bed where he lay with heavy bandages on his legs. "A boy exploded the bomb near us. I don't think he knew what it was."

Mahamud and three girls with light injuries were admitted at the Ugandan peacekeepers' hospital located in the south of the city adjacent to the azure Indian Ocean.

Two other boys, including the one who exploded the grenade, were admitted at the Madina hospital with serious wounds.

The heavily guarded African Union hospital is made of tents and a ward, laboratory and theatre where minor surgery can be done. There are four doctors and 50 staff attending dozens of patients including sick Ugandan troops.

Dozens of Somalis suffering from bullet wounds and different ailments including cholera are admitted at the hospital and are treated for free, the Ugandan doctor in charge, Ambrose Oiko, said during a tour for journalists on Monday.

President Abdullahi Yusuf's government is struggling to impose central rule on the Horn of Africa nation, in anarchy since warlords kicked out dictator Mohamed Siad Barre in 1991.

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