By Tom Perry
AIN AL-HILWEH, Lebanon, June 4 (Reuters) - Islamist gunmen killed two Lebanese soldiers at a Palestinian refugee camp in south Lebanon on Monday in the first fatal spillover of fighting between the army and al Qaeda-inspired fighters in the north.
Two militants of the Jund al-Sham group were also killed in the firefight on the edge of the big Ain al-Hilweh camp near the southern port city of Sidon, security and military sources said.
Three soldiers and two civilians were hurt in intermittent clashes, which began on Sunday night and calmed later on Monday. The violence was the latest jolt to stability in Lebanon, where a political crisis pitting the Western-backed government against Syria's Lebanese allies has paralysed state institutions since last year's war between Israel and Hezbollah guerrillas.
Hundreds of civilians fled Ain al-Hilweh, a sprawling shantytown perched on a hillside above Sidon, 42 km (26 miles) south of Beirut. Palestinian President Mahmoud Abbas's Fatah faction dominates the camp, but small Islamist groups have a foothold there and in several other refugee camps in Lebanon.
The Lebanese army has battled one such Sunni group, Fatah al-Islam, for more than two weeks at the Nahr al-Bared outside Tripoli, 100 km (60 miles) north of the Lebanese capital.
The Ain al-Hilweh clashes were the first to erupt in other Palestinian camps in Lebanon, where few people support Fatah al-Islam. Its pro-Qaeda ideology of global jihad is at odds with the national struggle waged by the Islamist Hamas movement, as well as with the secular ideas of Fatah and leftist groups.
Palestinian factions held emergency talks with the army command in Sidon to ease tensions. Jund al-Sham fighters then ceded their positions to gunmen from other Islamist groups.
"The army asked the Palestinian factions to seek a halt to attacks on the army, saying that if they don't stop, it would act firmly," said a Palestinian source who attended the meeting.
Some 500 Palestinian and Lebanese civilians who had fled the fighting took refuge at the municipality compound in Sidon.
"We fear what happened at Nahr al-Bared will happen here," said Hani Bernawi, 31. "They (Jund al-Sham) are just a gang who came here to mess things up and and destroy our security."
Amal Abbas, a Palestinian woman who had left Ain al-Hilweh, said: "The state which let them in should deal with them. We are not against the army, we are with them."
KINDRED SPIRITS
Jund al-Sham, made up of a few dozen Palestinian and Lebanese militants, has sided with Fatah al-Islam, though they do not appear to have organisational links.
Its fighters attacked the army just hours after a Fatah al-Islam commander named Abu Riyadh, who had previously belonged to Jund al-Sham, was killed in Nahr al-Bared.
The violence at Nahr al-Bared is Lebanon's worst internal fighting since the 1975-1990 civil war. At least 113 people have died and about 25,000 of the camp's 40,000 refugees have fled.
Machinegun fire and explosions echoed sporadically from Nahr al-Bared, where outgunned Fatah al-Islam fighters have refused to surrender. But the fighting was less intense than in the previous three days of army assaults on militant positions.
Witnesses said a score of civilians made their way out of the camp, as the army brought up more armour, men and supplies, apparently preparing for another push against Fatah al-Islam.
Prime Minister Fouad Siniora's government sees itself at war with terrorists backed by Damascus, which rejects the charge. Secular Syria says Fatah al-Islam's leaders are on its wanted list and that such groups threaten its own security.
Eleven soldiers have been killed in Nahr al-Bared since Friday, bringing the military death toll there to 45, while more than 20 people -- militants and civilians -- were killed. Fatah al-Islam said it lost five fighters and about 36 in total.
While the army has not entered the camp's official boundaries, it has captured the militants' positions on its outskirts, confining militants to about a third of the camp.
A 1969 agreement prevents the army from entering Lebanon's 12 Palestinian camps, home to 400,000 refugees.
(Additional reporting by Nazih Siddiq in Nahr al-Bared)