Yemeni army advances on third rebel-held town

ADEN, Yemen (Reuters) - Islamist militants fled from Yemeni government forces advancing on the southern coastal town of Shaqra on Thursday in a U.S.-backed offensive to recapture territory from the Al Qaeda-linked insurgents, a local official and residents said.

The government troops and allied tribal fighters were a few kilometers (miles) from Shaqra after retaking an area held by the insurgents on the outskirts on Wednesday.

Many insurgents fled at dawn and headed towards the town of Azzan after setting fire to two tanks and other military equipment, Shaqra residents said.

The militants were forced out of their strongholds of Zinjibar and Jaar on Tuesday in the army's most significant victory against them in more than a year of turmoil that has taken Yemen to the brink of civil war.

Thousands of soldiers backed by tanks and war planes launched the offensive last month and were joined by local tribesmen opposed to the militants. The United States has provided training and other support, including drone strikes, showing its concern that its Islamist foes have gained a new foothold in the Middle East.

Emboldened by waning government control over the country during last year's protests that ousted former President Ali Abdullah Saleh, the militants seized Jaar in March 2011, before occupying Zinjibar and Shaqra.

Their advance fuelled fears about al Qaeda's presence in a country next to Saudi Arabia, the world's biggest oil exporter, and close to shipping lanes.

After weeks of heavy fighting, the government forces recaptured Zinjibar and Jaar on Tuesday. Residents of the wrecked cities have begun to return to their homes but officials urged them to wait until landmines planted by the militants before they left had been cleared.

Seven people were killed, including two civilians, in Zinjibar on Wednesday night by mines, an official said.

Militants of Ansar al-Sharia, an al Qaeda offshoot, boasted they would spread the war across Yemen after they were forced to abandon the towns, according to the SITE Intelligence Group which monitors militant websites.

U.S. officials say President Abd-Rabbu Mansour Hadi - who came to power in February after Saleh signed a power transfer deal brokered by the Gulf states - is more cooperative in the fight against Islamist militants than his predecessor.

Al Qaeda in the Arabian Peninsula (AQAP) is believed to be the most active branch of the global network and has plotted a number of botched attempts against U.S. targets.

(Reporting by Mohammed Mukhashaf; Writing by Rania El Gamal; Editing by Angus MacSwan)