* ISIL imposes rules on Christians in city it controls
* Edict shows aim of setting up hardline Islamist state
* Radical group in rivalry with main al Qaeda rebels
BEIRUT, Feb 26 (Reuters) - An al Qaeda splinter group has demanded that Christians in a Syrian city it controls pay a levy in gold and curb displays of their faith in return for protection, according to a statement posted online on Wednesday.
The Islamic State in Iraq and the Levant (ISIL), mainly composed of foreign fighters, is widely considered the most radical of the groups fighting President Bashar al-Assad, and is also engaged in a violent struggle with rival Islamist rebels.
Its directive to Christians in the eastern city of Raqqa is the latest evidence of the group's ambition to establish a state in Syria founded on radical Islamist principles, a prospect that concerns Western and Arab backers of other rebel groups fighting Assad.
ISIL said it would ensure Christians' safety in exchange for the levy and their adherence to restrictions on their faith, citing the Islamic legal precept of 'dhimma'.
It said Christians must not make renovations to churches or other religious buildings, display religious insignia outside of churches, ring church bells or pray in public.
It demanded every Christian man pay a tax of up to 17 grams of gold, a levy that was common in Muslim states centuries ago.
The directive also bans Christians from owning weapons and from selling pork or wine to Muslims or drinking wine in public.
The concept of dhimma, governing non-Muslims living under Islamic rule, dates back to the early Islamic era in the seventh century, but was largely abolished during the Ottoman reforms of the mid-19th century.
Raqqa was the first and only city to fall completely under rebel control last year. After repelling an offensive last month by rival Islamists and more moderate rebels, ISIL has turned its attention to setting up a state based on a radical interpretation of Islamic law.
It issued a more general set of restrictions for all residents of Raqqa last month, but this week's notice included the most extensive restrictions yet on Christians.
The statement, dated Saturday, was posted on a Twitter account of a purported ISIL supporter. The text matched a statement distributed by the Syrian Observatory for Human Rights, an anti-Assad monitoring group, which condemned it.
The recognised al Qaeda affiliate in Syria, the Nusra Front, has demanded ISIL submit to mediation to end the infighting that has killed about 3,300 people this year, saying it will "eradicate" them if they do not comply in the coming days. (Reporting By Stephen Kalin; Editing by Robin Pomeroy)