* Source said rebels halted, but reports of fighting
* Insurgents attack towns of Damara, Bossangoa
* France says Seleka close to capital
* Panic on the streets of Bangui (Recasts with helicopter attacking rebel advance)
By Paul Marin Ngoupana
BANGUI, March 22 (Reuters) - A Central African Republic attack helicopter opened fire on rebels advancing on the capital on Friday, breaking up their column, a senior regional peacekeeping source said, days after a peace deal broke down in the mineral-rich nation.
The source from a neighbouring Central African power, who asked not to be named, said the helicopter strike had halted the Seleka insurgents - though no one was available to comment from the rebels and CAR officials said fighting was continuing on the road to Bangui.
France's foreign ministry said the rebels had advanced to within "a few kilometres" of the capital of its former colony and it advised French citizens there to restrict their movements.
In Bangui, panicked residents ran through the streets, shops closed and schools sent home pupils after national radio announced the rebel approach.
Seleka, a loose umbrella group of insurgents which has accused the government of breaking a series of peace deals, had earlier said its forces planned to take the city on Friday.
"The rebel column, which was headed south, was stopped by an aircraft ... an attack helicopter," the senior regional military source, who asked not to be identified, told Reuters.
"The helicopter opened fire on the column, forcing it to disperse ... The rebels have not reached Bangui," he added.
The violence is the latest in a series of rebel incursions, clashes and coups that have plagued the landlocked nation in the heart of Africa since its independence in 1960.
CAR remains among the least developed countries in the world despite rich deposits of gold, diamonds and uranium.
The Seleka force took a series of towns and came close to the capital last year, after accusing President Francois Bozize of failing to honour an earlier peace deal to give its fighters cash and jobs in exchange for laying down their arms.
Regional powers, including Chad and South Africa, sent in troops to back the government and the revolt ended in a January peace accord.
Seleka broke that truce on Wednesday, saying the government had again failed to implement agreements to incorporate its fighters into the army and get the foreign troops withdrawn.
PRESIDENT BACK IN CAPITAL
Residents in Damara, around 75 km (50 miles) from the riverside capital, said regional peacekeepers had allowed the Seleka rebels to pass their roadblocks outside the town early on Friday. The insurgents had then clashed with government forces in Damara before taking the road to Bangui, they said.
Bozize, who had been on a visit to South Africa, returned to Bangui on Friday and went straight to the presidential palace, officials said.
"The rebels have been pushed back but fighting is still going on between Damara and Bangui," said special presidential advisor Pascal Bolanga. He said Bozize was directing operations from the palace.
The president, who seized power in a 2003 coup backed by Chad, had met with his South African counterpart Jacob Zuma, securing an increase in South Africa's 400-strong troop deployment, officials said.
"We can announce the South Africa president's expression of fraternal support via the dispatch of additional troops," David Gbanga, the director of state radio, announced to the population. "Stop panicking and remain calmly in your homes."
A spokesman for South Africa's Defence Ministry declined to comment.
The U.N. Security Council convened an emergency session at 5:00 p.m. EDT (2100 GMT) to discuss the fighting.
"Everything is closed here," Saint Hardy, an accountant in Bangui, told Reuters by telephone, saying army units were rushing to the city's outskirts to face the rebels.
Military officials said the rebels had also captured Bozize's hometown of Bossangoa, around 300 km (190 miles) from Bangui, one of the largest towns in the country's north and a barracks for the republican guard.
"It is serious. Bossangoa has fallen," said one senior Central African Republic defence official. "Our men tried to resist but without success." (Reporting by Daniel Flynn and Bate Felix in Dakar and Ange Aboa in Abidjan; Editing by Andrew Heavens)