MOGADISHU, April 28 (Reuters) - Allied Somali-Ethiopian troops patrolled Mogadishu on Saturday, hunting for weapons after claiming significant gains in battles with insurgents that have killed at least 1,300 people since February.

Residents said interim government forces were deployed in the capital's Bakara Market, formerly a stronghold of rebels frustrating the administration's efforts to restore central rule in the Horn of Africa nation for the first time in 16 years.

"We are ready to collaborate with the government soldiers and we also welcome their arrival in the area," Abas Ahmed Duale, spokesman for a committee representing the market's businessmen, told independent Somali broadcaster Shabelle.

Some homes and commercial properties, including a Coca Cola plant, were looted on Friday as relative calm returned after nine-days of Mogadishu's heaviest fighting for years.

On Saturday, government troops were posted at strategic junctions in the city, searching cars and passengers for arms.

The African Union (AU) has called for more peacekeepers to be sent urgently to Mogadishu. Some 1,500 Ugandan soldiers already there have been pinned down by the clashes, restricted to guarding the presidential palace and air and sea ports.

"If we do not deploy troops soon, it will be disaster and a tragedy for Africa," Alpha Omar Konare, the chairman of the AU Commission, told reporters in Uganda on Friday.

The United Nations has accused both sides in the conflict of breaking humanitarian law by indiscriminately firing on civilian areas, and says the rate of displacement in Somalia over the past three months has been worse than Iraq in the same period.

Some 350,000 people have fled the city since February, more than a third of its one million population. Thousands have sought shelter in surrounding town and villages, sleeping under trees or out in the open, vulnerable to disease and robbers.

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