* Residents say dozens killed in North Waziristan
* Army says used "utmost restraint"
* Talk of major offensive as peace negotiations flounder (Adds army statement)
By Maria Golovnina
ISLAMABAD, Dec 23 (Reuters) - Residents of Pakistan's ethnic Pashtun region of North Waziristan accused government troops on Monday of killing dozens of civilians during a military operation against Taliban insurgents.
The operation started just after a Dec. 18 suicide bomb attack on a checkpoint in North Waziristan, a stronghold for al Qaeda-linked Taliban militants on Pakistan's mountainous border with Afghanistan.
Speculation that the army might launch a major offensive in the frontier tribal areas has been building as the government's attempts to engage the Pakistani Taliban in peace talks have floundered in recent months.
Military officials said more than 30 militants, most of them ethnic Uzbeks, had been killed in the operation.
"Security forces exercised utmost restraint to avoid any collateral damage," the army said in a statement.
"The Pakistan military spokesman reiterated that the military action against the terrorists in North Waziristan on Dec. 19 was in response to an attempt by terrorists to ambush a military convoy.
"The intelligence-based sting military operation later was specifically targeted against foreign terrorists holed up in a nearby compound."
Foreign militants from various places including central Asia have long been known to be based in the region.
The army in its statement did not say anything about residents' accusations of civilian casualties. The military's media wing could not be immediately reached for comment.
Pakistani authorities imposed a curfew and residents said many people had fled from their homes after days of shelling and raids by helicopter gunships in the Mir Ali region of North Waziristan following the suicide attack.
Resident Muhammed Tayyab said he lost three of his children and his wife in the shelling.
"On the first day of the attack an artillery shell hit the room where my kids and wife were sleeping," Tayyab told Reuters by telephone. "The government has put them to sleep forever."
"WHERE IS SAFE?"
Residents put the civilian death toll at several dozen.
"From the first day of the attack until now 70 civilians have been killed," said a tribal elder in Mir Ali who declined to be identified for fear of state reprisals.
"Some truck drivers and hotel and shop keepers were shot directly, and dozens were killed by gunships, mortars, and artillery shelling on the civilian population."
Reports from North Waziristan are hard to verify independently because journalists and observers are not allowed to work on the ground in the heavily militarised region.
The Pashtun lands along the Afghan border have never been brought under the full control of any government.
Taliban commander Hafiz Gul Bahadur said insurgents would respond by launching a full-scale counter-offensive on army positions if attacks against civilians did not stop on Monday.
Residents said bodies were left in the open in the villages of Mosaki and Hasukhel as terrified villagers fled the area.
"We are moving our families to keep them safe but the army's mortars and shells are following us," said Asad Sher of Mir Ali. "Please tell us where is safe. The army is demolishing our homes and bazaars."
Malik Gul Salehjan, another man, said: "My children are asking me for bread but I am not able to give them anything because there is nothing in my house."
A North Waziristan administration official said tribal elders and army representatives convened a jirga, or meeting, on Monday to try to find a negotiated end to hostilities. (Additional reporting by Jibran Ahmad in Peshawar; Editing by Robert Birsel)