(Refiles to fix typo in first bullet point)
* At least 14 killed, dozens wounded, thousands flee
* Islamists take, then lose, Mogadishu police station
By Abdi Guled and Abdi Sheikh
MOGADISHU, June 3 (Reuters) - Islamists briefly re-took an area of Mogadishu on Wednesday in street battles that killed 14 people, wounded dozens more, and added to an exodus of residents from the coastal Somali capital, residents said.
Insurgents from the militant al Shabaab movement, whom Western security services say are al Qaeda’s proxy in Somalia, are battling government forces for control of Mogadishu in the biggest test to date for President Sheikh Sharif Ahmed.
Since early May, Mogadishu street battles have killed more than 200 people and 86,000 people have fled, according to witnesses and the U.N. refugee agency.
Two years of Islamist-led insurgency in Somalia have killed nearly 18,000 people, allowed piracy to flourish offshore, made more than 1 million people internal refugees, sent hundreds of thousands more across borders, and created one of the world’s worst humanitarian crises.
"War, drought and malnutrition are thrusting Somalia towards even greater catastrophe. Tens of thousands are on the move, hundreds of thousands are displaced and more than three million are in dire need of aid," said Hassan Noor, aid agency Oxfam’s humanitarian coordinator for Somalia.
Al Shabaab sent battle-wagons into north Mogadishu early on Wednesday, taking Yaqshid police station after heavy fighting, but then being beaten back later in the day, residents said.
"It is push-and-pull," resident Farhan Aden said of the battles in recent days to control the strategic post.
A human rights group said at least 6 civilians had died in one place on Wednesday, and 54 been injured. Resident Maslah Tifow said he had seen eight corpses on the street in another.
"They are shelling each other," he said.
"A mortar hit one of my house rooms but thanks to Allah I‘m safe. The dead bodies included an old woman of my neighbourhood whose head was hit by mortar shrapnel."
Advances by al Shabaab and its allies have been worrying Western powers and neighbours as they fear the Islamist rebels may use Somalia as a base to destabilise the region’s two biggest economies, Kenya and Ethiopia.
President Ahmed, a former Islamist rebel himself, joined a U.N.-brokered peace process last year and was elected by parliament in January. He has sought dialogue with al Shabaab, but been rebuffed.