SANAA, July 6 (Reuters) - A Yemeni court sentenced seven rebels from a Shi'ite Muslim sect to death on Monday after convicting them of causing deaths in clashes with army in 2008.

Hundreds of people died in the conflict and thousands fled their homes in battles between government forces and the rebels in the north, which have raged on and off since 2004.

The state security court also jailed for terms of 12-15 years another five of the rebels accused of seeking to install Shi'ite Islamic rule in the country, which borders the world's biggest oil exporter Saudi Arabia.

In July 2008, President Ali Abdullah Saleh said the battles with the rebels, known as the Houthis, had ended and that dialogue should replace fighting. The rebels belong to the Shi'ite Zaydi sect and are led by Abdul-Malik al-Houthi.

Officials have often said the rebels want to restore a form of clerical rule prevalent in the country until the 1960s. The rebels, who want Zaydi schools and oppose the government's alliance with the United States, say they are defending their villages against government oppression.

Sunni Muslims form a majority of Yemen's 19 million population, while most of the rest are Shi'ite Zaydis.

One of the poorest countries outside Africa, Yemen is also grappling with a violent campaign by al Qaeda militants, dwindling oil and water resources, unemployment, corruption and a growing community of Somali refugees. (Reporting by Mohammed Ghobari; Editing by Inal Ersan; Editing by Jon Boyle)

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