BEIRUT (Reuters) - Hizbollah fought fierce battles with Israeli troops on the Lebanese border on Thursday and the guerrilla group insisted only a prisoner swap would bring back the two Israeli soldier it had captured last week.

"If the entire universe came (to pressure Hizbollah) it will not bring back the Israeli soldiers unless through indirect negotiations and a prisoner swap," Sayyed Hassan Nasrallah told Al Jazeera television in an interview.

Al Jazeera said earlier four Israelis had been killed. An Israeli military source said there had been Israeli casualties but gave no details. Israeli media reported eight soldiers wounded. Hizbollah said two of its fighters were killed.

The firefight took place just inside Lebanon, near an area where Hizbollah guerrillas killed two Israeli soldiers and wounded nine in Lebanon on Wednesday.

Earlier on Thursday three Israeli soldiers were wounded, two of them seriously, in clashes in the area. The Israeli army said two Hizbollah fighters were killed in that battle.

Hizbollah said it had destroyed two Israeli tanks in house to house fighting in the village of Maroun al-Ras. The group's al-Manar television showed captured Israeli equipment, including a rifle, night-vision binoculars, grenades and a video camera.

Elite Israeli troops have launched small raids inside Lebanon in recent days to try to destroy Hizbollah positions and stop guerrillas firing rockets into the Jewish state.

Israel, which is also waging a three-week military campaign in Gaza, launched its offensive after Hizbollah captured two soldiers and killed eight in a cross-border raid on July 12.

Its bombardment has killed at least 312 people in Lebanon, mainly civilians, and displaced hundreds of thousands. At least 29 Israeli soldiers and civilians have been killed.

The United States, which has exerted no public pressure on Israel for a cease-fire, said Secretary of State Condoleezza Rice may travel to the Middle East next week to press for a political solution to reduce fighting.

NO DAMAGE

Nasrallah, whose whereabouts are unknown, said Israel attacks have not damaged the group's leadership structure.

"All this Israeli talk that they hit 50 percent of our rocket capabilities and warehouses, this talk is wrong and nonsense," he said.

Israel told Germany it would welcome any help Berlin could give in trying to free the two soldiers held by Hizbollah, but it also reiterated its rejection of Hizbollah's proposal for a prisoner swap similar to one mediated by Germany in 2004.

Israel's Defence Minister Amir Peretz raised the possibility of a ground offensive into Lebanon, something senior generals have also repeatedly said they do not rule out.

The border clashes have shown the guerrilla group is still moving relatively freely near the hilly frontier despite a week of heavy artillery barrages from the Jewish state.

U.N. Secretary-General Kofi Annan called for an immediate end to hostilities, but said a team he had sent to the region believed a sustainable cease-fire would take time to arrange.

He told the Security Council a quick end to the fighting would allow aid workers to reach those in need and would "give diplomacy the chance to work out a practical package of actions that would provide a lasting solution to the current crisis".

A tiny U.S. Marine force landed in Lebanon to evacuate about 1,000 Americans stranded with thousands of other foreigners.

It was the U.S. military's first return to Lebanon since it withdrew in 1984, months after a Shi'ite Muslim suicide bomber destroyed a Marine barracks killing 241 U.S. service personnel.

Israel told Germany it would welcome any help Berlin could give in trying to free the two soldiers held by Hizbollah, but it also reiterated its rejection of Hizbollah's proposal for a prisoner swap similar to one mediated by Germany in 2004.

About 40 Marines arrived on a beach in a Christian area north of Beirut at dawn to ferry about 1,200 Americans to Cyprus as part of efforts to extract U.S. citizens caught in a war zone like thousands of other foreigners, many of Lebanese origin.

"We are thankful to leave but our hearts and prayers are with Lebanon and its people," said evacuee Mireille Ayoub, 47, from Los Angeles. "It's very bad there, unsafe and uncertain."

France arranged for some 550 French and other European nationals to embark from the battered southern port of Tyre.

Israel, which has imposed a sea and air blockade of Lebanon and bombed the main road to neighbouring Syria, said it would let aid into Lebanon to ease the growing threat of a humanitarian crisis. It was not clear how the aid could reach worst-hit areas in the south where roads and bridges have all been targeted.

Israel's offensive in Lebanon has coincided with a major push into the Gaza Strip to retrieve another soldier, seized by Palestinian gunmen on June 25 and stop cross-border rocket fire.

Israeli troops killed a Palestinian in clashes in a central Gaza refugee camp on Thursday, witnesses said. Separate air strikes in the same area killed two militants, the army said.

Israel's offensive, launched on June 28, has killed about 110 Palestinians, half of them militants.

(Additional reporting by Beirut and Jerusalem bureaux and Yara Bayoumy in Dubai)