* At least two killed in clashes
* Residents demonstrate in south
* Shabaab rebels execute two men
MOGADISHU, 28 Sept (Reuters) - Somali government troops routed Islamist insurgents from a strategic central town after launching a pre-dawn assault on Monday, witnesses said.
Baladwayne resident Mohamed Salah told Reuters he saw two dead bodies on the streets and at least four people, including a police officer, had been wounded in the fighting.
"Government troops are in everywhere in town this morning. The other forces fled after brief clashes," Salah said. "It is calm now, but we are afraid that there will be more fighting."
Baladwayne has changed hands violently several times in recent months. It was a stronghold of al Shabaab rebels, who the United States says are al Qaeda's proxies in Somalia.
The town lies near the Ethiopian border. Last month residents said Ethiopian forces in armoured vehicles had invaded to chase out al Shabaab gunmen. [ID:nLT480675]
But the Islamist fighters later returned.
A senior military official, Mohamud Agajog, confirmed to Reuters that government forces were now back in control.
The international community wants to bolster President Sheikh Sharif Ahmed's fragile U.N.-backed government, which controls only parts of the country's arid central region and a few districts of the coastal capital Mogadishu.
REBELS FACE-OFF IN SOUTH
Violence in Somalia has killed more than 18,000 civilians since the start of 2007 and driven 1.5 million from their homes.
In the southern port of Kismayu, hundreds of residents demonstrated on Monday over growing tensions between al Shabaab and another rival insurgent group, Hizbul Islam.
Hizbul Islam forces expelled al Shabaab leaders from Kismayu over the weekend, just days after al Shabaab unilaterally named its own local administration. Witnesses said both sides were rushing reinforcements to the area in anticipation of battle.
The port -- a lucrative source of income for the rebels -- was closed because of the possibility of clashes, and residents said more insurgent checkpoints were blocking roads.
Sheikh Hassan Yaqub, the al Shabaab spokesman in Kismayu, said al Shabaab would "take action" against Hizbul Islam soon.
"We are aware of those who came into the town and are disturbing security," he told reporters. "We will take firm action against anyone who makes trouble. We're in full control."
Elsewhere, al Shabaab fighters in northern Mogadishu executed two men they accused of spying for the United States' Central Intelligence Agency (CIA) and Ahmed's government.
"These men were spies for the enemy and they were sentenced under sharia law," said Sheikh Abdulhaq, an al Shabaab cleric.
No other details on the pair or their fate were immediately available, but a third Somali was sentenced to 20 lashes and six months in jail for making counterfeit $100 bills, Abdulhaq said.
Islamic courts run by al Shabaab members have ordered executions, floggings and amputations before, mostly in Kismayu. (Additional reporting by Ibrahim Mohamed and Mohamed Ahmed in Mogadishu and Sahra Abdi in Nairobi; Editing by Daniel Wallis)
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