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By Abdi Sheikh

MOGADISHU, Oct 28 (Reuters) - Fighting raged for a second day in the Somali capital on Sunday as Ethiopian troops clashed with Islamist-led rebels in the heaviest battles for weeks.

Fearful residents cowered behind closed doors as mostly Ethiopian forces supporting the interim government sought again to crush heavily armed insurgents.

Marking a major offensive, gun and artillery duels that began in Mogadishu before dawn on Saturday resumed in force. In one part of the coastal city, local media said insurgents had seized a police station after the officers guarding it fled.

Elsewhere, scores of angry residents took to the streets to vent their fury at the latest violence, burning piles of tyres that sent plumes of thick black smoke into the sky.

"They have started firing again and I have no way to move my family," said Sahra Osman, a widow with five children.

"I have been fleeing my home and returning since the Ethiopian troops arrived here, but now I can't even hire a wheelbarrow."

She lambasted both sides for fighting in the city centre among thousands of women and children, instead of picking a remote rural location.

At least 15 people have been killed so far, local media says, including as many as seven Ethiopian soldiers. Dozens of civilians have been wounded by stray bullets and shrapnel.

HOSPITALS CUT OFF

Elmi Hussein, a Mogadishu man whose cousin died in Saturday's battles, said it was better to be killed outright than to suffer the fate of the injured in the Somali capital.

"The wounded die painfully here," he told Reuters. "The roads to the hospitals are always blocked whenever war starts and people die from loss of blood."

The fragile Somali government, which has U.N. backing, has been shaken by an insurgency of Iraq-style roadside bombings, assassinations and suicide attacks since it routed a hardline Islamist movement in January with the help of Ethiopian tanks and warplanes.

On Saturday, Ethiopia's arch-foe Eritrea suggested Addis Ababa might soon withdraw some of its troops from Somalia as part of a plot to invade Eritrea ahead of a late-November deadline for the two nations to agree on their disputed border.

Ethiopia has denied all such Eritrean allegations in the past, but the new fighting in Mogadishu looked to mark a renewed effort by Ethiopian forces to crush the insurgents.

The latest battles with the rebels, which Somalia's government says include foreign fighters linked to al Qaeda, come as tensions at the top of the fledgling Somali administration threaten to split it wide open.

Analysts say President Abdullahi Yusuf and Prime Minister Ali Mohamed Gedi have feuded almost from the moment they came to power in late 2004 following two years of peace talks in Kenya.

But their rift widened this year after they backed rival concerns hoping to exploit the nation's potential oil resources.

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