(Adds details, description of Damaturu on Saturday, President Jonathan)
* Conflict with Islamist sect escalating
* Army says most of the dead were militants
* Hospital staff say most bodies civilians
By Mike Oboh
KANO, Nigeria, Dec 24 (Reuters) - Gun battles between Nigerian security forces and an Islamist sect killed at least 68 people in two days of fighting in northern Nigeria, authorities and hospital sources said on Saturday.
Militant group Boko Haram, which wants to impose Islamic sharia law across the country split roughly equally between Christians and Muslims, has been blamed for scores of shootings and bombings in Nigeria's remote, semi-arid northeast, including a spate of attacks in the past few weeks.
Nigeria's army killed more than 50 members of the sect during fighting on Thursday and Friday in the northeastern city of Damaturu, the force's chief of staff Lieutenant General Azubuike Ihejirika said in comments published in local media.
Three soldiers also died, he added.
"There was a major encounter with Boko Haram in Damaturu and we overran their stronghold and their ammunition site," Ihejirika said.
"They came with sophisticated and heavy weaponry including GPMGs (machine guns) and bombs but our trained soldiers subdued them."
Hospital sources in Damaturu said they had counted 50 bodies so far, but most of the dead were civilians.
"So far 50 bodies have been deposited at the mortuary by the military and police operatives," a hospital worker told Reuters by telephone. "They were ... seven policemen, two soldiers and 41 civilians."
In a separate incident in the city on Friday, suspected sect members opened fire on a group of policemen shortly after prayers, killing four, police said.
Residents said Damaturu was quiet on Saturday, but surveyed by a heavy military and police presence.
"Everywhere is so tense here. There's nobody on the street except security men. The bodies of those killed are being removed from the mortuary ... Our town is virtually a ghost town," Usman Mamman, a Damaturu resident, said by telephone.
At least 11 people were killed in another shootout in the remote northeastern city of Maiduguri, Boko Haram's heartland on the threshold of the Sahara and bordering Chad, Niger and Cameroon, on Thursday, a morgue official said.
Clashes between security forces and the sect, whose name roughly translates as "Western education is forbidden", have become increasingly frequent in the past couple of weeks, as the north's simmering conflict escalates.
There was no immediate comment from Boko Haram, which rarely makes public statements.
Before this year, the Islamist insurgency was largely contained in its heartland in Maiduguri. It has since has spread to other parts of the north, including neighbouring Yobe state, where Damaturu lies.
The town was the scene of the most deadly Boko Haram assault to date, when 65 people were killed in a wave of shootings and bombings on November 5 that left churches, police stations and mosques reduced to smouldering rubble.
This year the Islamists struck the capital Abuja twice, including a suicide car bomb attack against the U.N. headquarters that killed 26 people.
President Goodluck Jonathan, a southern Christian who has dismissed the Islamist rebellion as "a temporary setback", made no mention of the violence in a statement on Saturday afternoon to mark this year's Christmas celebrations. He focused instead on his economic "promise of national transformation". (Additional reporting by a reporter in Maiduguri; Writing by and additional reporting by Tim Cocks; Editing by Myra MacDonald)