* Three new souks in flames - activist
* UNESCO deplores destruction of Old City
* Air strikes kill 17 in north Syria
* Prominent pro-Assad militiaman severely wounded
By Oliver Holmes
BEIRUT, Oct 1 (Reuters) - Fires that gutted a vast historic market have broken out in other areas of the Old City of Aleppo, a world heritage site, as rebels and government forces fight for the ancient heart of Syria's biggest city, opposition activists said on Monday.
The rebels last week announced a fresh attempt to seize the wider city, home to 2.5 million people, which was until July firmly under the control of President Bashar al-Assad.
With government forces holding the large medieval citadel in the heart of the Old City, the fighting that has already claimed more than 30,000 lives across Syria seems certain to destroy more cultural treasures too.
"Rebels control more that 90 percent of the Old City now," said Ameer, an opposition activist working with rebel brigades.
But he said they were struggling to hold their positions under heavy artillery fire.
The Syrian Observatory for Human Rights, which has a network of activists across Syria, said at least 100 people had been killed countrywide on Monday, including 18 members of the security forces in an ambush on a convoy heading from the central city of Homs to the eastern desert town of Palmyra.
In Aleppo, Ameer said rebels still held the Souk al-Madina, a covered market of 13 km (8 miles) of vaulted stone alleyways and carved wooden facades, once a major tourist attraction.
Fires that damaged more than 1,500 shops had been put out, he said, but new fires had now broken out in the Old City's Zahrawi, Aqaba and Bab Al Nasr markets. Plumes of black smoke were rising from many districts, and gunfire could be heard.
The rebels are sensitive to suggestions that they might have brought the conflict to one of Syria's greatest historical and commercial centres. Aleppo was once the last stop before Europe for traders plying the ancient Silk Route from Asia.
"It's urban warfare. I cannot blame any side specifically for the fires," Ameer said over Skype.
"POISON OF TERRORISM"
The 18-month-old uprising-turned-civil war has pitted Assad's minority Alawite sect against rebels who are mostly from the Sunni majority, stirred sectarian tensions in the Middle East and divided world powers.
In a speech to the U.N. General Assembly, Foreign Minister Walid al-Moualem accused the United States, France and the mostly Sunni Muslim Qatar, Saudi Arabia and Turkey of supporting terrorism by providing arms and money to rebels, and said their calls for Assad to step down were "blatant interference".
All the five countries have denied arming the rebels, although some have given logistical support such as communications equipment. However, Gulf sources told Reuters in July that Turkey had set up a secret base with Saudi Arabia and Qatar to direct military and communications aid to the rebels.
In talks with Moualem, U.N. Secretary-General Ban Ki-moon "raised in the strongest terms the continued killings, massive destruction, human rights abuses, and aerial and artillery attacks committed by the government", Ban's spokesman said.
Assad has painted Syria's uprising as a Sunni Muslim conspiracy, which many Syrians say is a tactic to deter minority groups from joining the revolt. Revenge attacks are common.
The Observatory said Mohammad al-Assad, a prominent founder of the 'shabbiha' groups, which started life as smuggling networks in the 1980s and have developed into pro-Assad militias, was severely wounded at the weekend.
It said Assad, a relative of the president known as the Sheikh of the Mountain, had been shot in a row about smuggling revenues in the family hometown of Qurdaha in the Alawite mountains.
Other activists said the fighting had been triggered by some Alawite families' fear of being dragged into a sectarian war. A visitor to the area said roads had been blocked on Sunday.
CYCLE OF DESTRUCTION
Syria's uprising has developed its own cycle of destruction. When rebel fighters - lightly armed and low on ammunition - push forward, government forces respond with artillery until fighters and civilians are flushed out and the army can move in.
But the rebels often sneak back, and the cycle restarts, suggesting bleak prospects for Aleppo's Old City, where the weekend's fires came close to the Great Mosque, parts of which are a thousand years old.
UNESCO Director-General Irina Bokova said that, as a signatory to the 1954 Hague Convention for the Protection of Cultural Property in the Event of Armed Conflict, Syria was obliged to safeguard its heritage from the ravages of war.
"The human suffering caused by this situation is already extreme," she said in a statement. "That the fighting is now destroying cultural heritage that bears witness to the country's millenary history - valued and admired the world over - makes it even more tragic."
A visitor to the Old City, who asked not to be named, said the fires, which started on Saturday, were a side effect of the fighting in the covered market, famous for its silks.
"An electrical fire started during clashes and spread quickly," he said, adding that several rebel groups, including those from the most prominent Tawheed Brigade, were involved in the rebel advance, which has had only marginal success.
UNESCO believes that five of Syria's six world heritage sites have already been damaged. The other sites include the ancient desert city of Palmyra, the Crac des Chevaliers crusader fortress and parts of old Damascus.