(Adds Iraqi Kurd reaction, paragraphs 9-11)

By Evren Mesci

ANKARA, Sept 28 (Reuters) - Turkey and Iraq signed an anti-terrorism deal on Friday targeting Kurdish rebels based in northern Iraq, but failed to agree on a plan that would have let Turkish troops chase militants across their shared border.

Ankara claims the right under international law to send its troops across the mountainous frontier in "hot pursuit" of guerrillas of the outlawed Kurdistan Workers Party (PKK), but Iraqi Kurds opposed any concession by Baghdad on this issue.

"We could not reach agreement on the article concerning improvement of border security cooperation. Our negotiations on this issue will continue," Turkish Interior Minister Besir Atalay said after the signing ceremony.

An estimated 3,000 PKK guerrillas use northern Iraq as a springboard from which to attack security and civilian targets inside Turkish territory.

Under the accord, the two countries pledged to take all necessary measures, including financial and intelligence, to combat the PKK and other militant groups. They will hold six-monthly meetings to coordinate their work.

Turkey blames the PKK for the deaths of more than 30,000 people since the group began its armed struggle in 1984 for an ethnic homeland in the mainly Kurdish southeast of the country.

"The agreement is very important for Iraq," Iraqi Interior Minister Jawad al-Bolani told reporters, adding his government would do all in its power to implement the measures.

But Ankara knows the Baghdad government has little clout in the autonomous Kurdish region of northern Iraq whose authorities are loathe to take action against their ethnic kin in the PKK.

KURDS UNEASY

Iraqi Kurds were quick to question the legitimacy of Friday's deal, saying it must be approved by the Kurdish regional parliament as well as by Baghdad and Ankara.

They also said the real target of the deal should not be the PKK but militant groups active in Iraq such as al Qaeda.

"The minister of interior has no right to sign agreements allowing foreign forces to enter Iraq, without being approved by the Iraqi parliament and Iraqi government," Jabbar Yawar, spokesman for the Kurdish armed forces, told Reuters.

An earlier draft of Friday's agreement had suggested Ankara ask Baghdad for permission each time it wanted to conduct pursuit raids into Iraq. But this was unacceptable to Turkey, which diplomats say conducts occasional cross-border forays.

Underlining the continued PKK threat, Turkish security sources said on Friday a total of 20 guerrillas had been killed during a major army offensive in Turkey's southeast province of Sirnak next to the Iraqi border over the past 15 days.

The troops destroyed shelters used by the group and seized stores of food, medicine and clothing, they said.

Turkish generals and politicians, exasperated by a steady stream of PKK attacks, have threatened to mount a full-scale invasion of northern Iraq to crush the PKK there.

But the United States has advised against such a move, fearing it would destabilise a relatively peaceful region.

Friday's agreement follows three days of talks and fleshes out promises on combating the PKK made by Iraqi Prime Minister Nuri al-Maliki during a visit to the Turkish capital last month.

Ankara believes Iraqi Kurdish leader Massoud Barzani aims to build an independent Kurdish state in northern Iraq and fears this could trigger separatist sentiment among its large ethnic Kurdish population in southeast Turkey.

(Additional reporting by Baghdad bureau)

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