* More than 250 civilians killed, 1,500 wounded since May 7

* More than 160,000 forced to flee homes due to fighting

* Fighting has sharply reduced aid deliveries, UNHCR says

By Stephanie Nebehay

GENEVA, June 26 (Reuters) - Spiralling violence in Somalia's capital Mogadishu is taking a heavy toll on civilians, with more than 250 killed and 160,000 forced to flee their homes over the past seven weeks, aid agencies said on Friday.

Fighting between government forces and the Islamist-led insurgency, which erupted on May 7, "is leaving a trail of civilian casualties, destruction and renewed displacement", the United Nations High Commissioner for Refugees (UNHCR) said.

"The deteriorating security situation has sharply reduced deliveries of desperately needed humanitarian aid to the displaced in and around Mogadishu," UNHCR spokesman William Spindler told a news briefing in Geneva.

Somali hospitals have reported more than 250 civilians killed and 900 wounded during the period, the UNHCR said.

The International Committee of the Red Cross put the number of wounded much higher at two Mogadishu hospitals, Medina and Keysaney, which it has provided with life-saving medical and surgical supplies.

"Since May 7, they received more than 1,500 wounded people in these two hospitals alone, which is far more than their usual capacity," ICRC spokeswoman Anna Schaaf said.

The humanitarian agency said it had no figure for the death toll in the latest round of fighting in the Horn of Africa country, where the government, which controls little but a few parts of the capital, declared a state of emergency a week ago.

A two-year insurgency has killed around 18,000 civilians and unknown numbers of fighters.

"We estimate that since the start of the fighting in May, more than 160,000 people have been forced to leave their homes and seek shelter elsewhere within Somalia or in neighbouring countries," Spindler said.

The ICRC, working closely with the Somali Red Crescent, managed this week to distribute blankets, tarpaulins, kitchen sets and clothes to 60,000 freshly uprooted people staying on the outskirts of of Mogadishu, according to Schaaf.

In all, an estimated 500,000 people have sought shelter on the outskirts of Mogadishu, not including those who fled to central Somalia, she said.

The United States said on Thursday it had sent weapons to Somalia's government to thwart Islamist insurgents, who cut hands and feet off thieves and paraded the severed limbs in the streets of Mogadishu.

The al Shabaab insurgents are seen as a proxy for al Qaeda and Western nations fear they could destabilise the region and provide safe havens for hardline Islamists from elsewhere.

The group, which has foreign fighters in its ranks, stepped up attacks in early May. It now controls most of south Somalia and all but a few blocks of Mogadishu.

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