* Fierce battles but few gains
* Syrian rebels threaten Kurdish militants
By Erika Solomon
BEIRUT, Sept 28 Syrian rebels struggled to make headway against government forces on Friday in a battle for Aleppo, the country's largest city.
On the second day of an offensive they have billed as decisive, the rebels also threatened to take on local Kurdish militants - a move which would further complicate a war that has already spilled over Syria's borders.
Fighters reached by telephone from Beirut described fierce combat in several neighbourhoods of Aleppo, Syria's commercial hub and the site of a two-month-long stalemate in the conflict.
Armed with machineguns and homemade rockets, they said they faced a difficult task against an enemy hitting them with artillery and fighter jets.
"We reached the middle of Suleiman al-Halibiya and liberated some neighbourhoods so I am still optimistic. But I'm worried about our organisation. We can't force the regime out. At best, I think we can advance some of our positions," one fighter said, requesting anonymity.
Other rebels told Reuters that one of the units fighting in the city had been surrounded. Another said some battalions were pulling out of the front line or had never joined the battle.
Rebels from the rural parts of northern Syria had flooded into Aleppo two months ago but were held back by shortages of ammunition and the army's superior firepower.
Aleppo is pivotal to the course of the conflict, in which at least 30,000 people have been killed since protests against President Bashar al-Assad broke out in February last year.
World powers have watched the carnage with dismay but have been unable to agree on a way to resolve the crisis, which threatens to destablise the wider region.
Neither side appears capable of striking a decisive military blow, although a rebel bomb attack wrecked the army's command headquarters in the heart of Damascus on Wednesday, showing their growing reach.
WARPLANES IN ACTION
Though the rebels claimed no major gains in Aleppo, government forces appeared to be coming under heavy attack in some quarters.
State television said "terrorist groups" were firing mortar rounds at an area in the southeast of the city, killing three people including two children, and wounding 10 others.
Activist Ahmed Abdelrahman said battles had been waged sporadically throughout the night and that a war plane had bombed a cluster of buildings near the town of Azaz, less than a kilometre from the border with Turkey.
Video published by activists showed frantic residents digging through a collapsed building and pulling out at least one body. Abdelrahman said others were still believed to be buried in the wreckage.
The rebels, who have grown suspicious over some Kurdish militants' ties with Assad, also threatened to confront groups they said were linked to the militant Kurdish Worker's Party (PKK) in neighbouring Turkey.
Turkey, which has thrown its weight behind the opposition and allows the Syrian rebels sanctuary, is woried about the autonomy-seeking PKK taking advantage of the unrest in Syria to strike inside its borders.
In Aleppo's Kurdish neighbourhood of Sheikh Maqsoud, rebels said they had captured at least eight men from the shabbiha - Syrian slang for pro-Assad militias. Some of the captives were killed, they said.
It was unclear if the victims were Kurds, a stateless ethnic group who stretch over much of the region and have so far been split over their support for the uprising. The current head of Syria's political opposition in exile is a Kurd.
One rebel leader issued a warning to the Kurds through the Facebook page for the Tawheed Brigade, the largest Aleppo unit.
"Tawheed Brigade leader Abdelqadir al-Saleh made a final request by phone to the PKK gangs, to drop their weapons immediately and not drag themselves into a losing battle that is not their fight," it said.
"Whoever carries arms in the face of the opposition battalions will find themselves under fire."
DIARY-Emerging Markets Economic Events to April 28
--------------------------------------------------------------- MONDAY, MARCH 27 SYDNEY - RBA Deputy Governor Guy Debelle speaks at forex conference in Sydney - 2200 GMT. NEW DELHI - Global Business Summit (to March 28). TUESDAY, MARCH 28 SYDNEY - Reserve Bank of Australia Deputy Governor Guy Debelle to speak at the FX Week Australia conference - 2300 GMT. BUDAPEST - Hungarian Central Bank to discuss the final version of its inflation report. JOHANNESBURG - South African Reserve Bank star