(Adds Diyala violence)

By Mohammed Abbas

BALAD, Iraq, Oct 8 (Reuters) - The U.S. commander in northern Iraq says that al Qaeda is making a last stand in the city of Mosul as violence has dropped elsewhere in the area.

Bombings and shootings occur almost daily in Mosul, 390 km (240 miles) north of Baghdad, even though nearly all of the rest of Iraq has become much quieter over the past 18 months.

The city's strategic position near Syria and remote mountainous and desert terrain make it difficult to secure, Major-General Mark Hertling told Reuters in an interview on Tuesday.

"We have had a real downturn in attacks against both coalition forces and Iraqi security forces," Hertling said.

"Mosul is a different story. Al Qaeda is specifically trying to hang on in Iraq and Mosul is the place they've chosen to do it."

U.S. and Iraqi forces say the weakened Sunni Islamist group is trying to regroup in north Iraq after being forced from western Anbar province and its strongholds in and around Baghdad.

"They're continuing to bring foreign fighters into the north through the Syrian border," Hertling said, referring to militants from Saudi Arabia, Jordan, Yemen, Pakistan, Syria and other countries.

Violence across Iraq's four northern provinces was down 56 percent in September compared to a year ago after a series of U.S. and Iraqi crackdowns in the region, Hertling said. But violence in other parts of Iraq is down more than 80 percent.

Hertling's territory in the north includes Diyala province, where a suicide bomber wearing an explosive vest killed seven people and wounded 20 on Wednesday, police said.

Hertling's comments contrast with those made in July, when he said a rise in violence in Mosul and surrounding Nineveh province was a "blip" and that al Qaeda was failing to attract enough new foreigners.

Al Qaeda is exploiting faultlines in relatively cosmopolitan Mosul, whose 1.8 million people are a patchwork of ethnic and sectarian groups, he said.

Mistrust between Arabs, who make up most of the police, and Kurds, who fill most army posts, hinders intelligence efforts, a Reuters reporter found on recent trip to the city.

"Mosul has always been a very cosmopolitan city, and there's a lot of people coming and going, which has caused it to be a very difficult city to control and secure," Hertling said.

On Tuesday, three Christian men were shot dead in Mosul. A U.S. soldier and an Iraqi policeman were also killed in a separate shootout with gunmen in the city.

Last month, gunmen kidnapped and shot dead three Iraqi journalists in Mosul from Iraq's Sharqiya TV station along with their driver, one of the single deadliest militant attacks on journalists in Iraq since the U.S.-led invasion in 2003.

(Editing by Samia Nakhoul)

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