(Adds Prime Minister Fouad Siniora comments, paras 12-14) By Nazih Siddiq NAHR AL-BARED, Lebanon, June 8 (Reuters) - Lebanese troops pounded al Qaeda-inspired militants dug in at a Palestinian refugee camp in north Lebanon on Friday after the group rejected demands to surrender. Artillery and tanks blasted several areas of the squalid Nahr al-Bared camp, where Fatah al-Islam fighters have shown stiff resistance in three weeks of often ferocious battles. Camp resident Wissam Badran told Reuters he had helped pull a man, woman and two children from under the rubble after a shell hit a house sheltering 10 civilians. He initially thought they were dead. "They lost consciousness. We thought they were dead, but thank God, they are alive," Badran said by telephone from inside Nahr al-Bared. Six others were lightly wounded, he said. The heavy thud of machinegun fire echoed across the area as fires raged inside and clouds of smoke billowed over the camp, abandoned by most of its 40,000 residents. Witnesses said at least 30 civilians were evacuated by relief workers. "Army units are ... gradually taking control of the terrorists' positions with the aim of ending this abnormal situation that was imposed on Lebanon," an army statement said, adding the militants had no choice but to face justice. Friday's fierce fighting resumed after two days of mostly sporadic clashes and came hours after Lebanese Islamists failed to convince Fatah al-Islam militants to surrender. But Lebanese sources said the Islamic Action Front, which includes Sunni politicians and clerics, and a grouping of Palestinian clerics would continue efforts to find a solution. "Any positive initiative from the other party, we will respond positively on our side," said Fatah al-Islam military commander Shahin Shahin involved in the negotiations. The militants, who have vowed to fight to the death, have repeatedly rejected demands by Lebanese authorities to give up their weapons or to surrender. AL QAEDA IDEOLOGY The fighting began on May 20 when the militants attacked army units deployed around Nahr al-Bared after one of their hideouts in a nearby city was stormed. At least 115 people, including 47 soldiers and 38 militants, have been killed. When asked by French television station TV5 whether the army had reached a "decisive stage" in the battles against Fatah al-Islam, Lebanese Prime Minister Fouad Siniora said: "The army is doing an incredible job and attacking the terrorists who are occupying the camp and at the same time (the army) is trying to preserve civilian lives," Siniora said according to a transcript released by his office in Arabic. "That's why this battle is taking a longer time and it's worth pointing out that these terrorists are well-equipped and well-trained and persistent." Fatah al-Islam was officially formed late last year. Its leader, veteran Palestinian guerrilla Shaker al-Abssi, says he shares the same ideology as al Qaeda but has no organisational links with that group. Many of his men are foreign Arab fighters, some of whom have fought in Iraq. The battles, the worst internal conflict since the 1975-1990 civil war, have threatened to spread to other parts of the country with deadly clashes earlier this week at another refugee camp and five bomb blasts in civilian areas in and near Beirut. A bomb exploded in a Christian industrial area north of Beirut on Thursday night, killing one civilian and wounding four, security sources said. The authorities have charged 32 detained members of Fatah al-Islam with terrorism, charges that carry the death penalty. Security forces also dismantled this week what they say is an al Qaeda cell preparing for car bomb attacks in Lebanon, arresting 10 people and seizing weapons and explosives. On Friday, security sources said border authorities had arrested nine Iraqis trying to enter Lebanon from Syria with forged Romanian passports. It was not known why they wanted to come to Lebanon. (Additional reporting by Yara Bayoumy and Laila Bassam)
