updated 7/15/2007 9:01:50 PM ET 2007-07-16T01:01:50

Lebanese infantry battled Islamic militants at close range Sunday, moving deep into a besieged Palestinian refugee camp and hoisting Lebanon’s red-and-white flag atop newly taken buildings, security officials and witnesses said.

Two soldiers were killed in the army’s deepest push yet into the Nahr el-Bared camp, bringing to 98 the number of troops who have died during the conflict that began nearly two months ago.

The al-Qaida-inspired militants fired at least Katyusha rockets from the camp that landed in fields a few miles away, security officials said. No casualties were immediately reported. The officials spoke on condition of anonymity because they were not authorized to give official statements.

The conflict with Fatah Islam militants holed up in the camp has been Lebanon’s worst internal violence since the 1975-90 civil war. At least 60 militants and more than 20 civilians have been killed in the fighting, according to the Lebanese government and U.N. relief officials.

On Sunday, the army pounded suspected militant hideouts with artillery shells and tank fire. The fighters responded with machine-gun fire and rocket-propelled grenades, according to the officials.

By mid-afternoon, witnesses reported hearing less tank fire and more machine guns, suggesting the army was engaging the militants in close combat.

The witnesses reported seeing several Lebanese flags flying on the roofs of destroyed buildings inside the camp, signaling progress by the army.

“We seized new buildings and hideouts of Fatah Islam militants,” said a senior military official.

The state-run National News Agency said the army was encircling a group of fighters hiding in one of their shelters in the camp. It said the army had killed a number of fighters, whose bodies were lying in the streets.

The use of Katyusha rockets appears to be a new tactic by the militants to ease the military pressure and expand the battles outside the camp. Fatah Islam fired at least six Katyusha rockets Saturday and 19 rockets on Friday into villages neighboring the camp, wounding two people.

Fighting between the army and militants erupted on May 20 in Nahr el-Bared, on the outskirts of the northern port city of Tripoli.

Sultan Abuleinein, head of Palestinian President Mahmoud Abbas’ Fatah faction in Lebanon, told reporters in the nearby Beddawi refugee camp Saturday that “not more than 70” Fatah Islam fighters remained in Nahr el-Bared. Earlier it was estimated that several hundred were hiding in the camp.

Abuleinein has called for the Islamic gunmen to be eliminated.

Outside Paris, France’s foreign minister reported that talks between Lebanon’s feuding political parties started tense but became more “serene” and “brotherly.”

Foreign Minister Bernard Kouchner said the 14 parties, locked in the country’s worst political crisis since the end of the civil war, pledged not to use violence for political ends, and rejected domination from forces outside Lebanon. But he was unable to offer specifics.

The informal talks Saturday and Sunday at a chateau west of Paris were organized by France with U.S. and Iranian approval. No breakthrough is expected, however, in the deadlock between the Western-backed prime minister and the Hezbollah-led opposition.

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