* Attack takes place in former militant stronghold
* Al Qaeda branch leader believed in mountains
* Biggest attack since Amenas gas assault in 2013 (Adds details on area, analyst comment)
By Lamine Chikhi
ALGIERS, April 20 (Reuters) - Islamic militants killed at least 11 Algerian soldiers in an ambush on a patrol in mountains east of the capital Algiers, a security source said on Sunday, in one of the deadliest attacks on the military in years.
The troops were searching for militants in the Tizi Ouzou region, 120 km (75 miles) east of Algiers, when they were attacked by fighters from al Qaeda's north African branch, Al Qaeda in the Islamic Maghreb (AQIM), the source told Reuters.
Another 11 soldiers were wounded, the source said.
The attack came just days after President Abdelaziz Bouteflika, 77, was re-elected for a fourth term following a campaign that portrayed the aging leader as key to continued security for the North African OPEC state.
Since the end of its 1990s war with armed Islamists, attacks have been rarer in Algeria. But Algerian officials are concerned about spillover from the turmoil in neighbouring Libya, where fighters linked to al Qaeda have sought refuge in the southern deserts.
The army has killed 37 militants in different regions of the country since January, according to the ministry of defense.
AQIM is mostly based in the Sahel area which crosses southern Algeria, but over the past few months the army has killed several militants in the eastern mountains, and security sources say some have been found with weapons traced to Libya.
Abdelmalek Droukdel, the university chemistry student who become AQIM leader after fighting in Afghanistan's civil war, is believed to be hiding in the eastern mountains.
Algerian forces last year killed two of Droukdel's deputies in Bouira, a former stronghold of militants during the 1990s war that was triggered when the government cancelled elections that an Islamist party looked set to win.
"This attack is a response to setbacks for AQMI which lost several of its militants in recent months, AQMI tried also to disrupt the election but it failed," Algerian security specialist Rahmani Anis told Reuters.
In January last year, militants raided Algeria's Amenas gas plant near Libya's border, killing 40 oil contractors, most of them foreigners, in an attack that prompted BP and Norway's Statoil to pull their workers out.
That attack was led by Mokhtar Belmokhtar, an Algerian veteran militant and former al Qaeda fighter who the French have dubbed "The Uncatchable". He was reported killed last year though there no confirmation and recent reports say he is still alive. (Writing by Patrick Markey; Editing by Rosalind Russell and Hugh Lawson)