Bosasso/Hargeisa, Somalia: Troops from two feuding regions of remote northern Somalia were bracing for a possible showdown on Thursday as they compete to rescue four German tourists held hostage there by pirates.

The Germans, two men, a woman and a child, were kidnapped in Yemen 17 days ago. They are now held in thickly wooded mountains near Las Qoray town, in a disputed region between Somaliland and Puntland.

"We have surrounded the pirates," Gurey Osman Salah, the Somaliland commander in Las Qoray, told Reuters by telephone. "We will not allow anyone near the area and we will not hesitate to use force."

Authorities

The move has angered the Puntland authorities, who withdrew their forces last week to avoid a clash with Somaliland troops, after local elders called for space to negotiate with the pirates and persuaded both sides to pull back.

International recognition has so far eluded both breakaway enclaves, and security experts say officials on both sides think rescuing the Germans would help their cause.

In Puntland's busy port city of Bosasso, residents said fighters were now preparing for redeployment, raising fears of a battle. Elders who tried to negotiate with the kidnappers were said to have withdrawn to Baran, south of Las Qoray.

"The troops have tested their weapons. We are preparing a force to be sent to Las Qoray," a senior Puntland police officer told Reuters. He declined to be named.

Border spat

Somaliland and Puntland, which are relatively peaceful compared with the rest of chaotic Somalia, have fought over the disputed regions on their border in the past, and the leftovers of war still pose a risk to the people.

In Puntland's administrative capital Garowe, witnesses said at least four children died yesterday and seven others were wounded when a boy found an old hand grenade and threw it onto a pitch where other boys were playing football.

Militia kills two people

Somali insurgents killed at least two people in an overnight attack on a government army base near the country's parliament, a village chairman said yesterday, in the latest of a string of hit-and-run attacks on government targets.

Al Shabab militia claimed responsibility for the attack and said its fighters beheaded several soldiers.

The claims could not immediately be verified.

Village chairman Mohammad Esaq said one of the dead was a soldier, and the other was in civilian clothes. Two civilians were also wounded, he said.

Al Shabab spokesman Shaikh Muqtar Robow said the fighters also seized weapons and burned water tankers.

"Our fighters launched an attack and briefly took over Daynunay military base and beheaded [a] number of the so-called government soldiers on the spot," he said.

The attack was the second in a week in the region of Baidoa, where the parliament of the shaky UN-backed government is in session. Hundreds of soldiers are stationed at Daynunay, a military base 24km northeast of Baidoa on the road that leads to Mogadishu.

Somalia's transitional government and its Ethiopian military allies have faced an insurgency since December 2006.