(Adds deaths, Burundi peacekeepers)

By Guled Mohamed

MOGADISHU, July 14 (Reuters) - Security was stepped up across the Somali capital Mogadishu on Saturday ahead of a major peace meeting seen as the interim government's best hope of strengthening its legitimacy in the Horn of Africa nation.

Troops were recalled from the regions and large numbers patrolled, closing streets in some areas before Sunday's conference of more than 1,000 elders, former warlords and politicians -- which Islamist insurgents have vowed to attack.

"Government troops have arrived in their hundreds," said Mogadishu resident Aden Ali, a 40-year-old father-of-four. "I have never seen so many soldiers as today. The government obviously wants to secure the city for the conference."

Roadside blasts, suicide bombings and assassinations blamed on Islamist rebels and clan militiamen are an almost daily threat to government troops, their Ethiopian military allies and African Union peacekeepers from Uganda.

In the latest violence, witnesses said two grenades were thrown at Ethiopian troops, killing one soldier. Residents said a shopkeeper was killed and two suspected rebels wounded when the troops returned fire.

Elsewhere in the city, residents said a civilian died in another grenade blast targeting Ethiopian soldiers.

News on Wednesday that the meeting would finally go ahead brought a mortar attack on the presidential palace and the conference venue itself, an old bullet-scarred police compound.

President Abdullahi Yusuf's interim government has struggled to impose authority on the country since ousting the hardline Islamic Courts movement from the capital in late December.

It hopes that by drawing Somalia's myriad clans to substantial talks it can win broad support -- no easy task in a nation that has foiled 13 previous attempts to set up central rule since dictator Mohamed Siad Barre's 1991 overthrow.

Some residents of the impoverished, rubble-strewn city say the administration has got it wrong, and should be talking to the Islamists -- who ruled much of southern Somalia for six months last year -- instead.

Also on Saturday, Burundi said France had agreed to pay 500,000 euros to airlift its peacekeepers to serve alongside the Ugandans in Mogadishu.

"We hope partners will do the same so Burundi's peacekeeping mission to Somalia succeeds," the French ambassador to Burundi, Joel Louvet, told reporters.

Burundi's army had said its troops would arrive in the Somali capital this month. But Defence Minister Germain Niyoyankana said that would be delayed again due to lack of equipment. (Additional reporting by Patrick Nduwimana in Bujumbura)

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