* Obama visits Mexico as drug violence rages
* More than 13,000 killed since late 2006
* U.S. drug war efforts still lacking, Mexico says
By Julian Cardona
CIUDAD JUAREZ, Mexico, Aug 6 Mexican drug gangs are killing rivals in record numbers in a major setback for the government, which will seek more support from U.S. President Barack Obama when he visits the country this weekend.
Severed heads, burned bodies, daylight shootouts and dead children are daily fare from Mexico's Caribbean to its desert border with the United States, even as army generals pour soldiers and elite police onto city streets.
Last month was the deadliest month of President Felipe Calderon's nearly three-year army assault on powerful cartels across Mexico with 850 deaths, according to media tallies.
The death rate so far this year stands at around 4,000, about a third higher than in the same period in 2008 despite a brief lull earlier in the year.
Mexico has managed to disrupt cocaine supplies and make some major arrests but top barons are still at large and more than 13,000 people have died in drug violence since Calderon took office in Dec. 2006.
"We're in a very decisive, very intense phase. There is no quick solution," said Hector Garcia, the top federal prosecutor in Chihuahua state bordering Texas and home to more than a third of killings in Mexico this year.
U.S. anti-drug aid is slow in coming and the drugs war is scaring off foreign investment just as Mexico suffers a deep economic recession.
Police found nine tortured bodies in two blood-smeared SUVs in Ciudad Juarez on Wednesday. Most residents in the city once famed for its night life are too scared to go out and swarms of U.S. tourists no longer cross the border to go to local bars.
"This is an unprecedented situation but I don't believe our operations are a failure," Garcia told Reuters in the city, Mexico's deadliest front in the drug war, where 10,000 troops and police have been unable to stop tit-for-tat killings.
Obama will fly to the western city of Guadalajara for his first North American leaders' summit with Calderon and Canadian Prime Minister Stephen Harper on Sunday.
Obama pledged full support to Calderon in the drugs war during a visit in April but Mexico complains that U.S. anti-drug equipment and training promised by the Bush administration in a $1.4 billion plan is taking too long.
Calderon is likely to ask Obama about the possible delay of $100 million in the anti-narcotics aid after a senior Democratic senator said this week that Mexico has not met human rights requirements needed for the money to be released.
"There is a commitment on Obama's part to support Calderon because you can't expect these multi-billion dollar cartels to roll back without putting up a fight," said Armand Peschard-Sverdrup at the Center for Strategic and International Studies in Washington. "This is about trying to end Mexico's culture of impunity and it comes at a price."
Two main groups, the Gulf cartel from northeastern Mexico and the Sinaloa gang from the Pacific, are battling for control of smuggling routes into the United States. A host of other cartels, including the cult-like "La Familia" (The Family) from Calderon's home state of Michoacan, have joined the fight.
DRUG DEALERS KILLED
In the drug war, rivals target anyone suspected of working for the cartels, increasingly small-time drug peddlers.
In a now familiar scene in Ciudad Juarez across from El Paso, Texas, two hitmen opened fire on a family gathering at the weekend in a poor neighborhood, killing three men.
"There's no law here anymore. You can't trust anyone," said a 40-year-old nurse who witnessed the killings but was too fearful to give her name.
U.S. border officials have intensified their efforts to stop the violence, making big drug seizures, checking cars entering Mexico from the United States for the guns and cash that make cartels so powerful, and sharing intelligence to catch traffickers.
On the Arizona border near Tucson, Border Patrol agents have seized a record 500 tons of marijuana since October.
But Jose Guadalupe Osuna, state governor for the violent border state of Baja California, says Washington is still not doing enough to stop Mexican drug gangs buying weapons in U.S. gun shops and smuggling them across the border.
Efforts to reform corrupt police in cities such as Monterrey, a major manufacturing center, are faltering, according to anti-crime lobby groups.
Money laundering is an area where the drug fight also appears to be weak. An International Monetary Fund report published in January says Mexican authorities have only made 25 convictions for money laundering since 1989.
"We see the soldiers on our streets but there's still so much violence. Calderon and Obama need to realize you can't just sort out this problem with guns," said Jaime Martinez, an insurance salesman buying lunch in Monterrey. (Additional reporting by Robin Emmott in Monterrey, Tim Gaynor in Phoenix and Lizbeth Diaz in Tijuana; Writing by Robin Emmott; Editing by Kieran Murray)