* Daring raid follows government offensive against al Qaeda
* Under pressure, insurgents turn to hit-and-run attacks
* Violence has spread to other towns and the capital (Updates with report of more deaths)
By Mohammed Ghobari
SANAA, May 14 (Reuters) - The Yemeni army killed more than 30 al Qaeda insurgents in heavy fighting on Wednesday, a senior military commander said, after the Islamists attacked military posts in a southern province where the government launched an offensive two weeks ago.
A military source said the militants had surprised troops at military outposts in the Azzan and Gol al-Rayda districts of Shabwa province, killing at least eight soldiers and sparking a battle that raged for hours. An army colonel was among the dead, a Defence Ministry source said.
The Yemeni army had captured both Azzan and Gol al-Rayda, as well as the Mahfad district in Abyan province, earlier this month after heavy fighting in which scores were killed on both sides.
Many of the militants, from Al Qaeda in the Arabian Peninsula (AQAP) and its affiliate, Ansar al-Sharia, fled to the mountains and turned to hit-and-run tactics against security forces and government facilities.
Wednesday's raid was one of their most daring actions since then. Lieutenant General Ahmed Saif al-Yafe'i, head of the Yemeni army's Third Military Command, called the assault a desperate attempt by "a group shaken by defeat" to show it was still able to fight back.
"Dozens of militants have fled Azzan, while more than 30 elements have been killed since the dawn of this day," the state news agency Saba quoted Yafe'i as saying.
He said the fighting had revealed that al Qaeda was recruiting children to fight and that documents and pictures showing this would be made available to the media soon.
A military source, speaking earlier by telephone from the battlefront in Azzan, told Reuters eight government soldiers and 10 al Qaeda militants had died in the fighting before air force planes were called in to attack the retreating militants.
BLACK FLAG OF AL QAEDA
A Yemeni journalist who specialises in covering al Qaeda, Abdulrazzaq al-Jamal, reported on his Facebook page that the militants had killed soldiers at a checkpoint and raised a black flag inscribed with the words "There is no god but God and Mohammad is his Prophet" over the main police station in Azzan.
Residents also said that many people had been forced to stay indoors as the sound of fighting rang out over the town.
Military sources in the field said the army had forced the militants to retreat, and that they had taken their dead and wounded with them.
The Defence Ministry said government forces had also captured a number of the militants in Azzan, who were found in possession of "documents, bombs and explosives belts".
The stability of Yemen, which shares a long border with the world's top oil exporter, Saudi Arabia, is an international concern, not least because AQAP has used it to launch attacks abroad. The United States has stepped up its aid and support for the government and military, including drone strikes.
Yemen has been beset by turmoil since 2011, when mass protests, part of the Arab Spring that began in North Africa, forced long-ruling president Ali Abdullah Saleh to step down.
Last week, four soldiers were killed in a gun battle with militants near the presidential palace in Sanaa.
On Sunday, a suicide bomber rammed a car packed with explosives into a military police building in the coastal city of Mukalla, killing at least 10 soldiers and a civilian.
Apart from the threat from Islamist militants, the Arab world's poorest country is also trying to cope with a separatist movement in the south and a rebel group in the north. (Additional reporting by Mohammed Mukhashaf in Aden, writing by Sami Aboudi; Editing by Kevin Liffey)