* Assad's forces keep up assault in Aleppo
* Rebels deny army has driven them from Salaheddine district
* Syrian charge d'affaires in London quits
By Erika Solomon
ALEPPO, Syria, July 30 The Syrian military stepped up its campaign to drive rebel fighters out of Aleppo, but rebels said they were still holding firm in the country's biggest city, which they have vowed to turn into the "grave of the regime".
Opposition activists denied a government declaration that its forces had recaptured the Salaheddine district, in southwest Aleppo, straddling the most obvious route for Syrian troop reinforcements coming from the south.
Hospitals and makeshift clinics in rebel-held eastern neighbourhoods were filling up with casualties from a week of fighting in the city, a commercial hub that had previously stayed out of a 16-month-old revolt against President Bashar al-Assad.
"Some days we get around 30, 40 people, not including the bodies," said a young medic in one clinic. "A few days ago we got 30 injured and maybe 20 corpses, but half of those bodies were ripped to pieces. We can't figure out who they are."
The opposition Syrian Observatory for Human Rights said 40 people, 30 of them civilians, were killed in Syria on Monday. Two rebel fighters died in Salaheddine.
Outgunned rebel fighters, patrolling in flat-bed trucks flying green-white-and-black "independence" flags, said they were holding out in Salaheddine despite a battering by the army's heavy weapons and helicopter gunships.
A fighter jet flew overhead, a reminder of the overwhelming military advantage still enjoyed by government forces 16 months into the uprising.
"We always knew the regime's grave would be Aleppo," said Mohammed, a young fighter, fingering the bullets in his tattered brown ammunition vest. "Damascus is the capital, but here we have a fourth of the country's population and the entire force of its economy. Bashar's forces will be buried here."
So far, however, the government's superiority on the ground means rebels have had little success in holding on to urban territory. The rebels made a major push into Damascus two weeks ago, but were later driven out.
An unidentified Syrian army officer said on state television late on Sunday that troops had pushed "those mercenary gunmen" completely out of Salaheddine, adding: "In a few days, safety and security will return to the city of Aleppo."
Reuters journalists in Aleppo have been unable to approach Salaheddine to verify who controls it.
The army's assault on Salaheddine echoed its tactics in Damascus earlier this month when it used its overwhelming firepower to mop up rebel fighters district by district.
Assad's forces are determined not to let go of Aleppo, where defeat would be a serious strategic and psychological blow.
Military experts believe the rebels are too lightly armed and poorly commanded to overcome the army, whose artillery pounds the city at will and whose gunships control the skies.
"Yesterday they were shelling the area at a rate of two shells a minute. We couldn't move at all," said a man calling himself a spokesman for the "Aleppo Revolution" group. "It's not true at all that the regime's forces are in Salaheddine."
Warfare has stilled the usual commercial bustle in this city of 2.5 million. Vegetable markets are open but few people are buying. Instead, crowds of sweating men and women wait nearly three hours to buy limited amounts of heavily subsidised bread.
In a city where loyalties have been divided, with sections of the population in favour of the Assad government, some seemed wary of speaking out in the presence of the fighters, many of whom have been drafted in from surrounding areas.
Asked about his allegiances, one man waiting at a police station that had been badly damaged by shellfire said: "We are not with anyone. We are on the side of truth."
Asked whose side that was, he replied: "Only God."
Others stopped members of the Free Syrian Army (FSA) and asked them to do something about the supply of bread and petrol.
Rebel fighters remain in control of swathes of the city, moving around those areas armed with assault rifles and dressed in items of camouflage clothing in an edgy show of confidence.
They were emboldened to strike at Aleppo and central Damascus by a July 18 explosion that killed four of Assad's top security officials.
The rebels include small numbers of foreign fighters drawn from other Arab countries, commanders in northwest Syria say. Some rebel checkpoints in Aleppo were flying black and white banners of Islamist militants.
BIG POWERS DIVIDED
With big powers divided, the outside world has been unable to restrain Syria's slide into civil war.
The only international military presence is a small, unarmed U.N. observer mission. A convoy carrying the head of the mission was attacked on Sunday and only the vehicles' armour prevented injuries, U.N. Secretary-General Ban Ki-moon said on Monday.
He gave no futher details of the attack. U.N. officials said on condition of anonymity that the convoy of five vehicles was hit by small arms fire in Talibisa, some 17 km (10 miles) from Homs, in what they said was an opposition-held area.
France said it would ask for an urgent meeting of the U.N. Security Council to try to break the diplomatic deadlock on Syria, but gave no indication that Russia and China would end their longstanding policy of blocking measures against Assad.
In London, Syria's most senior diplomat resigned because he could no longer represent a government that committed such "violent and oppressive acts" against its own people, the British Foreign Office said. Charge d'affaires Khaled al-Ayoubi joins a growing number of senior Syrian officials who have defected.
The deputy police chief of Latakia, a city in western Syria, also defected and fled to Turkey overnight with 11 other Syrian officers, a Turkish official said. Some 600 Syrians had arrived in the last 24 hours, bringing the total number of Syrian refugees in Turkey to around 43,500, he added.
Amid growing concern about security on its frontier, Turkey sent at least four convoys of troops, missile batteries and armoured vehicles to the border with Syria.
There has been no indication that Turkish forces will cross the border, and the troop movements may just be precautionary in the face of worsening violence in Syria.
A high-ranking officer in one of the convoys called the deployment "part of a training exercise".
The United Nations humanitarian chief said 200,000 people had fled Aleppo, only 50 km (30 miles) from the Turkish border, in two days. It was not clear how this estimate had been reached given the difficulty of assessing relief needs in war zones.
Assad's ruling system is dominated by his minority Alawite sect, an offshoot of Shi'ite Islam, while his opponents are mostly from Syria's Sunni Muslim majority. The sectarian element in the conflict has raised fears that it could inflame Sunni-Shi'ite tensions elsewhere across the Middle East.