* Rebels clash with opposition al Qaeda fighters
* Infighting comes as Assad forces make gains
* Islamists said to have beheaded rivals
By Erika Solomon
BEIRUT, July 6 (Reuters) - Rebels clashed with an opposition unit linked to al Qaeda in northern Syria, activists said on Saturday, in a deadly battle that signals growing divisions among rebel groups and rising tensions between locals and more radical Islamist factions.
The rebel infighting comes as forces loyal to President Bashar al-Assad have made gains on the battlefield and drawn comfort from the downfall this week of Egypt's Muslim Brotherhood, which under ousted President Mohamed Mursi had thrown its weight behind the Syrian opposition.
The Islamic State of Iraq and al-Sham (ISIS), the new al Qaeda franchise announced by the head of global network's Iraq leader, has been quickly working to cement power in rebel-held territories of northern Syria in recent months.
ISIS units have begun to impose stricter interpretations of Islamic law and have filmed themselves executing members of rival rebel groups whom they accuse of corruption, and beheading those they say are loyal to Assad.
Syria's two-year revolt against four decades of Assad family rule has degenerated from a peaceful protest movement into a bloody civil war that has killed more than 100,000 people.
As fighting drags on and resources grow scarce, infighting has increased both among opposition groups and militias loyal to Assad, leaving civilians trapped in increasingly volatile and fragmented areas.
The latest internecine clashes happened in the town of al-Dana, near the Turkish border, on Friday, local activists said. The opposition group known as the Free Youths of Idlib said dozens of fighters were killed, wounded or imprisoned.
A report from the Syrian Observatory for Human Rights, an opposition monitoring group, said that the bodies of a commander and his brother, from the local Islam Battalion, were found beheaded. Local activists working for the British-based group said the men's heads were found next to a trash bin in a main square.
The exact reason for the clashes have been hard to pin down, but many rebel groups have been chafing at ISIS's rise in power. It has subsumed the once dominant Nusra Front, a more localised group of al Qaeda-linked fighters that had resisted calls by foreign radicals to expand its scope beyond the Syrian revolt to a more regional Islamist mission.
"PERSONAL GLORY AND WORLDLY AIMS"
Residents of rebel-held territories in the north once welcomed hardline Islamist groups, even those linked to al Qaeda which often included radical foreign militants with experience of fighting in Afghanistan and Iraq.
Town leaders would say the hardline groups were better organised, less corrupt and set up administrative councils to keep electricity running and food supplies coming in.
But locals are growing more wary of the groups, particularly ISIS, as they impose their austere interpretations of Islamic law. Some say the groups have beaten or executed residents seen as defying them.
Protests against radical Islamist groups are becoming more common. The Observatory said the al-Dana clashes were set off at an anti-ISIS protest when some Islamist militants fired at the demonstration.
But other activists in Idlib province, where al-Dana is located, argued that the clashes were more about local power struggles than demonstrations.
ISIS units are believed to be buying up land and property in some parts of Idlib and Aleppo province, and they also have tried to control supplies of wheat and oil in other rebel areas.
Islamist groups that support al Qaeda posted statements on Facebook and Twitter saying that they had not started the clashes and had not tried to impose their will on locals.
"The Islamic State has been running many missionary activities in al-Dana, through religious guidance and counselling and posting roadsigns that exhort the virtues of morality, while also working to keep the city safe and offer conflict resolution," a statement in the name of ISIS read.
The Free Youth Movement of Idlib, an activist group, lambasted both the Qaeda militants and the local rebel group that fought them.
"The two sides are fighting over power, as if the regime had already fallen ... Do not paint one side as better than the other" it said.
"These fighters were part of two groups who are battling on the front line, but they are doing it for personal glory and worldly aims. Martyr after martyr from both groups are falling each day on the front lines... God keep us away from chaos and temptation." (Reporting by Erika Solomon; Editing by Giles Elgood)
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