* U.S., Turkey to expand planning on help for rebels
* Fighting erupts in Damascus, rebels pushed back in Aleppo
* German spy chief says Syrian army crumbling
* Jordan border clash, Lebanon arrest show perils for region
By Hadeel Al Shalchi
ALEPPO, Syria, Aug 11 The United States and Turkey indicated on Saturday they were studying a range of measures, including a no-fly zone, as battles between Syrian rebels and President Bashar al-Assad's forces shook Aleppo and the heart of Damascus.
U.S. Secretary of State Hillary Clinton said after meeting her Turkish counterpart Ahmet Davutoglu in Istanbul that Washington and Ankara should develop detailed operational planning on ways to assist the rebels fighting to topple Assad.
"Our intelligence services, our military have very important responsibilities and roles to play so we are going to be setting up a working group to do exactly that," she said.
Asked about options such as imposing a no-fly zone over rebel-held territory, Clinton said these were possibilities she and Davutoglu had agreed "need greater in-depth analysis", while indicating that no decisions were necessarily imminent.
"It is one thing to talk about all kinds of potential actions, but you cannot make reasoned decisions without doing intense analysis and operational planning," she said.
Though possible intervention appears to be a distant prospect, her remarks were nevertheless the closest Washington has come to suggesting direct military action in Syria.
No-fly zones imposed by NATO and Arab allies helped Libyan rebels overthrow Muammar Gaddafi last year. Until recently, the West had shunned the idea of repeating any Libya-style action.
Saudi Arabia and Qatar are believed to be arming Syrian rebels, while the United States and Britain have pledged to step up non-lethal assistance to Assad's opponents.
Davutoglu said it was time outside powers took decisive steps to resolve the humanitarian crisis in cities such as Aleppo, where Assad's forces have fought rebels for three weeks.
JETS, TANKS IN ACTION
In the latest battles, tanks and troops pummelled rebels near the shattered district of Salaheddine, a former opposition stronghold that commands the main southern approach to Aleppo.
Tank fire crashed into the adjacent Saif al-Dawla neighbourhood as military jets circled over an abandoned police station held by rebels, firing missiles every few minutes.
Insurgents said they had been forced to retreat in the latest twist in relentless, see-saw battles for Salaheddine, part of a swathe of Aleppo seized by rebels last month.
Some rebels, outgunned and low on ammunition in Aleppo, have pleaded for outside military help, arguing that more weapons and a no-fly zone over areas they control near the Turkish border would give them a secure base against Assad's forces.
"The reason we retreated from Salaheddine this week is a lack of weapons," complained Abu Thadet, a rebel commander in Aleppo who said his fighters would regroup and fight back. "We can handle the bombing. It's the snipers that make it hard."
Ten of the 30 fighters in his brigade have been wounded, mostly by snipers lurking even in areas rebels claim to control. His men have broken holes in walls of buildings to try to create safe passages for them to move around in Salaheddine.
In Damascus, where Assad's forces have regained control of districts overrun by rebels last month, a resident reported an explosion near the Central Bank, followed by gunfire.
"The explosion was huge. There has been fighting for the past half-hour along Pakistan Street. I am very close. Can you hear that?" she told Reuters, a bang audible over the telephone.
Syrian state TV said authorities were hunting "terrorists" who had set off a bomb in Merjeh, an area near the central bank, and who were "shooting at random to spark panic among citizens".
The pro-opposition Syrian Observatory for Human Rights said 40 people were killed across Syria on Saturday.
END GAME BEGINS?
Despite their superior firepower, Assad's forces have been stretched by months of warfare against increasingly skilled and organised fighters who have taken them on in every city and in many parts of the countryside at one time or another.
Germany's spy chief said the Syrian army had been depleted by casualties, deserters and defectors.
"There are a lot of indications that the end game for the regime has begun," said Gerhard Schindler, head of the BND intelligence agency, in an interview with Die Welt newspaper.
"The regular army is being confronted by a variety of flexible fighters. The recipe of their success is their guerrilla tactics. They're breaking the army's back."
Syria's torment, however, is far from over and several signs point to how the conflict could spill over into its neighbours.
Jordanian and Syrian forces clashed along the border overnight when Syrian refugees tried to cross into Jordan, a Syrian opposition activist who witnessed the fighting said.
He said armoured vehicles were involved in the clash in the Tel Shihab-Turra area, about 80 km (50 miles) north of Jordan's capital, Amman. No deaths were reported on the Jordanian side.
Thousands of Syrians have fled into Jordan, but tensions heightened after Assad's newly installed prime minister, Riad Hijab, defected and escaped across the border this week.
In Lebanon, Michel Samaha, a former information minister and Assad ally, faces military indictment for his alleged part in "terrorist plots" which included transporting explosives from Syria for use in north Lebanon, a Lebanese security source said.
Lebanon, still scarred by its 1975-90 civil war, is nervous about instability spreading from Syria and shattering its own delicate sectarian power-sharing balance between Shi'ite and Sunni Muslims, Christians and other minorities.
Assad's main outside allies are Shi'ite Iran and Lebanon's Shi'ite Hezbollah movement. His ruling system is dominated by members of his Alawite minority, an offshoot of Shi'ite Islam.
His foes are mostly from Syria's Sunni majority, who are backed by Sunni-ruled states such as Saudi Arabia, Qatar and Turkey, which are also regional rivals of Iran.
Arab foreign ministers will meet on Sunday in Jeddah to discuss the Syria crisis and who should replace Kofi Annan, the United Nations-Arab League envoy, a League official said.
U.N. diplomats said veteran Algerian diplomat Lakhdar Brahimi could be named next week as the new envoy for Syria.
Annan quit after his peacemaking efforts proved futile in the face of divisions in the U.N. Security Council, where Russia and China have blocked Western attempts to speed Assad's exit.