GLOBAL MARKETS-European stocks hit three-week low as Trump reality sets in
* Dollar falls as market frets over supply of reserve currency
* French aircraft bomb Islamist fighters in Mali
* France has some 550 troops in West African nation
* African states convene summit
* Malian army searches house for Islamists in Konna
By Bate Felix and Chine Labbé
BAMAKO/PARIS, Jan 13 French fighter jets bombed Islamist rebels in Mali for a third day on Sunday as Paris poured more troops into the capital Bamako, awaiting the arrival of a West African force to dislodge al Qaeda-linked insurgents from the country's north.
French Defence Minister Jean-Yves Le Drian said France's dramatic intervention on Friday to bomb a convoy of heavily armed Islamist fighters sweeping southwards had stopped them from seizing Mali's capital Bamako within days.
Western countries fear Islamists could use Mali as a base for attacks on the West, forming a link with al Qaeda militants in Yemen, Somalia and North Africa.
Le Drian said former colonial power France was carrying out continuous bombing raids against the alliance of rebel groups, which seized the country's vast desert north in April.
"There are raids going on now: there were some last night, and there will be more tomorrow," Le Drian told French television. "The president is totally determined that we must eradicate these terrorists who threaten the security of Mali, our own country and Europe."
Residents said French aircraft bombed the northern town of Gao, and a Malian rebel spokesman said they bombed targets in the towns of Lere and Douentza.
Le Drian said France was deploying a further contingent of 80 soldiers to Mali on Sunday, bring the total to 550 soldiers , split between Bamako and the town of Mopti, some 500 km (300 miles) north. State-of-the-art Rafale fighter jets would be dispatched to reinforce the operation on Sunday, he said.
A Reuters cameraman reported seeing on Sunday more than 100 French troops disembarking from a military cargo plane at Bamako airport, just on the outskirts of the capital.
Bamako itself was calm on Sunday, with the sun streaking through the dust enveloping the city as the seasonal Harmattan wind blew from the Sahara. Some cars drove around with French flags draped from the windows to celebrate Paris's intervention.
Hours after opening one front against al Qaeda-linked Islamists, France mounted a commando raid to free a French hostage in Somalia held by al Shabaab militants allied to al Qaeda, but failed to stop him being killed along with a French commando.
A French pilot was killed on Friday when rebels in Mali shot down his helicopter.
President Francois Hollande has made it clear that France's aim in Mali is to support the deployment of a West African mission to retake the north, endorsed by the United Nations, the European Union and the United States.
The 15-nation West African bloc ECOWAS convened a summit for Saturday in Ivory Coast to discuss the military campaign.
With Paris pressing West African nations to deploy troops quickly, Ivory Coast President Alassane Ouattara, who holds the rotating ECOWAS chairmanship, has kick-started the operation to deploy some 3,300 African soldiers.
Ouattara was himself installed in power with French military backing in 2011 after a brief civil war triggered by former president Laurent Gbagbo's refusal to step aside after losing a late 2010 election.
"The troops will start arriving in Bamako today and tomorrow," Ali Coulibaly, Ivory Coast's African Integration Minister, said. "They will be convoyed to the front at Sevare."
Under cover from French fighter planes and attack helicopters on Friday, Malian troops drove the Islamists out of the strategic central town of Konna, which they had seized a day earlier. A senior Malian army official said more than 100 rebel fighters had been killed.
Military analysts expressed doubt, however, that this was the start of a swift operation to retake the whole of northern Mali - a harsh, sparsely populated terrain the size of France - as neither equipment nor ground troops were ready.
In Nigeria, which will lead the ECOWAS force, a military official who asked not to be identified said it would take time to train and equip the troops.
In Konna, calm returned after three nights of combat.
"Soldiers are patrolling the streets and have encircled the town," one resident, Madame Coulibaly, told Reuters by phone. "They are searching houses for arms or hidden Islamists."
Another inhabitant said the army set up roadblocks along the route north from Sevare to Konna and was checking for rebels. President Diouncounda Traore declared a state of emergency on Friday giving the military sweeping powers to carry out searches and shut down parts of the country.
"The army is in Konna ... securing the town and to make sure it is safe," army spokesman Lieutenant Colonel Diarran Kone said.
A resident in the northern city of Gao, one of the Islamists' strongholds, had reported scores of rebel fighters were retreating northward in pickup trucks on Saturday. In Bamako, some civilians tried to contribute to the war effort.
"We are very proud and relieved that the army was able to drive the jihadists out of Konna. We hope it will not end there that is why I'm helping in my own way," said civil servant Ibrahima Kalossi, 32, one of over 40 people who queued to donate blood for wounded soldiers.
Concerned about reprisals on French soil, Hollande instructed Prime Minister Jean-Marc Ayrault to tighten security in France at public buildings and on public transport.
France advised its 6,000 citizens in Mali to leave. Thousands more French live across West Africa, particularly in Senegal and Ivory Coast.
Hollande's intervention in Mali could endanger eight French nationals being held by Islamists in the Sahara. A spokesman for one of Mali's rebel groups, Ansar Dine, said on Saturday there would be repercussions.
"There are consequences, not only for French hostages, but also for all French citizens, wherever they find themselves in the Muslim world," Sanda Ould Boumama told Reuters. "The hostages are facing death."
* Dollar falls as market frets over supply of reserve currency
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