MOGADISHU, Dec 17 (Reuters) - Eleven people were killed on Wednesday in fighting between Islamist insurgents and Ethiopian forces in the north of Somalia's capital Mogadishu, residents and witnesses said.

The insurgents control the south of Somalia and carry out near-daily Iraqi-style assassinations and roadside bombings on government troops and their Ethiopian allies in the chaotic Horn of Africa nation.

Residents said insurgents opened fire on Ethiopian troops patrolling neighbourhoods in the Livestock Market area early on Wednesday and the Ethiopians responded with heavy weapons.

Resident Omar Nur told Reuters a woman and three children were killed by mortars that landed on adjacent houses. Isa Bayle, another resident, said the mortar exchanges killed three people as they fled their homes.

Sheikh Abdirahim Isse Adow, spokesman for the Islamic Courts insurgent movement, said two of its fighters were killed. The Islamic Courts were driven from the capital two years ago by Somali and Ethiopian forces.

Ethiopia said last month it would pull its troops out of Somalia by the end of the year and there are fears the country could descend further into anarchy unless more peacekeepers are sent soon.

The fractured Western-backed administration controls only Mogadishu and the seat of parliament, Baidoa, and the insurgents are camped on the outskirts of the capital.

The United States said on Tuesday that a United Nations peacekeeping force should be deployed in Somalia and it would push for a Security Council resolution authorising one by the end of the year.

Mogadishu resident Halima said the shelling resumed in the afternoon, killing more people who returned to their homes. (Reporting by Abdi Sheikh and Abdi Guled in Mogadishu; Editing by David Clarke and Mark Trevelyan)

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