Battle with rebels kills and wounds scores in Yemen

Smoke billows from the site of an airstrike in Haidan town in the northwestern Yemeni province of Saada August 12, 2009, in this video grab released by the Houthi rebel group.

SANAA (Reuters) - Fighting between Yemeni troops backed by fighter aircraft and Shi'ite rebels has killed and wounded dozens in the north of the poor Arab country, local officials and rebels said on Wednesday.

Local officials said fierce clashes continued across the mountainous northern province of Saada, a day after troops launched a major offensive and the government said it would strike with an "iron fist."

Rebel leader Abdul-Malik al-Houthi's supporters said in a statement that 15 of their fighters had been killed and dozens wounded.

The official news agency Saba said local officials announced a state of emergency in Saada province, a stronghold of Houthi's backers who belong to the Zaydi branch of Shi'ite Islam. The agency gave no casualty figures for government forces.

Yemen, one of the poorest Arab countries, has been battling a Shi'ite Muslim rebellion, a wave of al Qaeda attacks and rising secessionist sentiment in the south.

The unrest has raised Western fears that it could become a haven for Islamic militants on the border with Saudi Arabia, the world's biggest oil exporter.

The offensive began a day after Yemeni President Ali Abdullah Saleh said renewed fighting in the north showed the rebels had no intention of sticking to a government peace plan announced a year ago.

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

The majority of Yemen's 19 million population are Sunni Muslims, and most of the rest are Zaydis.

In July 2008, Saleh said four years of intermittent fighting against Shi'ite rebels in the north had ended and dialogue should replace combat. Despite his attempts to start talks, sporadic fighting continued and has intensified in recent weeks.

(Reporting by Mohamed Sudam; writing by Firouz Sedarat; editing by Michael Roddy)