* Report seizure of town of Menaka near the Niger border
* Pro-autonomy Tuaregs want talks with Malian government
* Resolving Tuareg grievances key to pacifying north (Adds French to start pulling out troops in March)
By Cheikh Diouara
KIDAL, Mali, Feb 5 (Reuters) - Pro-autonomy Tuareg rebels in Mali said on Tuesday they had occupied the town of Menaka, extending their control of the remote northeast as they position for talks with the government after the retreat of al Qaeda-linked insurgents.
It was not possible to independently verify whether MNLA fighters had entered Menaka, some 250 km (156 miles) south of their stronghold of Kidal. Menaka was a cradle of the MNLA's separatist uprising last year that took over northern Mali but was subsequently hijacked by al Qaeda and its allies.
Malian military officials have accused the MNLA of seeking to exaggerate its presence in the north to strengthen its hand in possible talks with Bamako after a three-week French-led offensive drove the Islamist fighters into the far northeast.
"Our forces have entered Menaka," MNLA spokesman Ibrahim Ag Mohamed Assaleh told Reuters by telephone from Ouagadougou, the capital of neighbouring Burkina Faso.
Ag Assaleh said the MNLA entered Menaka because there were rebels from al Qaeda's north African wing AQIM, as well as its splinter group MUJWA and Ansar Dine, operating nearby after being driven from the region's main towns, Timbuktu and Gao.
"We took Menaka to make sure the area was secure ... The Malian army do not want to leave Gao," Ag Assaleh said. "Any town which is not secured, we will take it."
Malian military sources said it was possible the MNLA had entered Menaka because Islamist rebels had fled and no other military force was occupying the town, situated some 100 km (60 miles) from the border with Niger.
The MNLA seized control of northern Mali in April, taking advantage of a power vacuum left by a coup in Bamako, but its revolt was eclipsed by a loose alliance of Islamist jihadists.
A three-week ground and air offensive by former colonial power France, however, has pushed the Islamist insurgents into northeast mountain hideouts. France said it intervened to stop the Islamists from seizing all of Mali and using it as a base for attacks in neighbouring African countries and the West.
In Paris, the French foreign minister said France planned to begin pulling troops out of Mali from March and will focus its operations on flushing out Islamist rebels in the north.
"We will continue to act in the north where some terrorist havens remain," Laurent Fabius said in an interview for Wednesday's Metro newspaper.
"I think that from March, if everything goes according to plan, the number of French troops should fall."
The MNLA says it has retaken control of Kidal and small towns around the Adrar des Ifoghas mountains, where many Islamists are believed to be hiding near the Algeria border.
"The MNLA's army is in control of the whole region around Kidal," said Albakay ag Ahmed, spokesman for the movement in that town. "It is here in Kidal, in Tessalit, in Aguelhok."
France, which says it has established close links with Tuareg rebels on the ground, sent special forces to seize Kidal's airport a week ago but has kept a low profile in the town. MNLA fighters drove around Kidal in pick-up trucks on Tuesday with their green, red, yellow and black flag flying.
"Azawad yesterday, Azawad today, Azawad always," shouted one group of young fighters, their hands joined in a sign of victory, using the rebels' name for northern Mali.
French Defence Minister Jean-Yves Le Drian told BFM-TV in Paris that Kidal was under control of French, African, and Chadian forces. He said the French troops had "functional relations" with the MNLA", who he described as "facilitators."
A French diplomatic source said France's army, already thinly stretched across the vast desert region, was coordinating its actions with the MNLA in the north.
"We're giving them tasks to carry out and it's going pretty well at the moment," said the source in Paris, adding that one of the challenges was understanding who were the leaders of the movement. "They have soldiers, weapons - more than we believed."
The MNLA said on Monday its patrols captured two senior Islamist leaders trying to flee to Algeria.
With only 4,000 troops in a region the size of Texas, France's military has appealed for urgent reinforcement from a U.N.-backed African force still being deployed.
Troops from neighbouring Niger and Chad have been backing the French in their operations against the Islamist fighters.
France carried out more air strikes overnight in the desolate Saharan expanses of Mali's far north, seeking to sever the Islamist fighters' supply lines and destroy their bases.
France has urged Mali's government to open a dialogue with northern communities including the Tuaregs. Malian interim president Dioncounda Traore says he is ready to talk to the MNLA provided they drop any claim to territorial independence. Traore says his government aims to hold national elections by July 31.
"From the moment that the MNLA declares - it appears that it's doing it - that it is neither terrorist nor secessionist, and that it wishes to enter into internal dialogue on Mali, it will be at the table," Le Drian said in Paris.
Talks with the MNLA would prove deeply unpopular with many ordinary Malians particularly in the black African-dominated south. They blame the Tuaregs for the current war, which has displaced more than 400,000 people.
Failure to solve the Tuareg issue could hamper the efforts of France and its regional and international allies to establish a lasting peace in Mali's north and prevent its use by al Qaeda as a springboard for jihadist attacks. (Additional reporting by Daniel Flynn in Dakar, Alexandria Sage and John Irish in Paris; Writing by Daniel Flynn; Editing by Pascal Fletcher and Angus MacSwan)