UPDATE 2-Turkey, Syrian rebels attack U.S.-allied militia - militia official

(Adds Islamic State attack)

BEIRUT, March 1 (Reuters) - The Turkish army and allied Syrian rebels attacked villages held by U.S.-allied militias near the city of Manbij in northern Syria on Wednesday, a spokesman for the militias said, an escalation of Turkey’s military campaign in the border area.

There was no immediate comment from Turkey, which is waging its “Euphrates Shield” campaign with Syrian rebels to drive both Islamic State and Kurdish militias away from the frontier, but the militia spokesman said there had been heavy bombardment.

Turkish President Tayyip Erdogan said this week Manbij was the next target of the campaign following the capture of al-Bab from Islamic State last week.

The new attack focused on a string of villages controlled by the Manbij Military Council, part of the U.S.-backed Syrian Democratic Forces (SDF) alliance, the spokesman for the Manbij Military Council told Reuters.

“There is a very big attack by the Euphrates Shield and Turkish army on the villages and areas of the Manbij Military Council,” Sharfan Darwish said. He named eight villages some 27 km (17 miles) west of Manbij. “There are fierce clashes ... and heavy artillery bombardment.”

The fighting was the fiercest between the two sides since August last year, when Turkey and the rebels fought SDF-allied groups in an advance towards Manbij from the Turkish border. The area has been mostly calm since a ceasefire that month which the United States helped to broker.

An upsurge in fighting between sides supported by two powerful NATO members will pose even more of a challenge for U.S. strategy in the battle against Islamic State, and further complicate northern Syria’s already crowded battlefield.

A separate statement from the Manbij Military Council said Islamic State fighters had attacked the SDF in villages 20 km south of Manbij at exactly the same time as the Turkish attack began. It did not explicitly state that the attacks were coordinated, however.

The SDF includes the powerful Kurdish YPG militia, viewed by Turkey as an extension of the Kurdistan Workers’ Party (PKK), a group that has waged a three-decade insurgency in Turkey.

The YPG helped capture Manbij from Islamic State last year in a U.S.-backed campaign fought under the SDF banner. The YPG has subsequently said it has withdrawn from Manbij. But Turkey continues to assert that the group remains in the city.

Darwish said the SDF was exercising “self restraint” since Erdogan’s comments, but would defend Manbij if necessary. (Reporting by Tom Perry; editing by Jeremy Gaunt and Dominic Evans)