* Dozens of al Shabaab, government fighters killed
* Rebels seize a number of heavily armed battle-wagons
* Residents wracked by fear of another attack
By Ibrahim Mohamed
MOGADISHU, Sept 12 (Reuters) - Somali troops have regained control of the southern town of Elwaq a day after Islamist rebels raided the border post in an attack that killed dozens of fighters on both sides, residents said on Monday.
Al Shabaab rebels appeared to have captured Elwaq after fighting erupted late on Saturday. But residents said the al Qaeda-linked militants quit the town on Sunday evening, making off with government battle-wagons and weaponry.
"Government soldiers and troops belonging to the (government allied) Ahlu Sunna militia group are now patrolling the streets again," Elwaq resident Faduma Nor Wehliye told Reuters by telephone.
Witnesses said dozens of bodies had laid scattered in Elwaq's dusty streets after intense gun battles, and the town briefly changed hands for the first time since March.
A spokesman for the al Qaeda-linked rebels said they had killed about 70 government allied soldiers and commandeered ten technicals -- open-topped 4x4s mounted with heavy calibre machine guns.
"We ambushed the town of Elwaq from two directions. We have defeated the TFG (Transitional Federal Government) and driven their soldiers out of Elwaq," Sheikh AbdulAziz Abdullahi Abdurahman, al Shabaab's top commander in Gedo region told journalists by phone on Sunday.
On Monday, a senior Somali military officer, Colonel Warfaa Ali, said his soldiers had recovered the bullet-riddled bodies of at least thirty militants, some of whom appeared to be children.
Al Shabaab retreated from the distant capital Mogadishu last month after losing key strategic bases in the coastal city, but warned it would fight on elsewhere amid internal divisions and reports of a shortage of combatants.
Somali troops, with logistical and intelligence support from Kenya and Ethiopia, regained control of a string of towns along the border with both neighbours earlier this year, but the insurgents had vowed to strike back.
The intensity of the weekend attack on Elwaq signalled a possible revival of al Shabaab in the semi arid border areas.
Elwaq is a stone's throw from Kenya, east Africa's biggest economy that has trained and armed Somali government troops and militia fighters, both groups say, in the hope they create a buffer zone distancing the militants from Kenyan territory.
Fear of another insurgent assault gripped residents on Monday and local businesses remained bordered up.
"It's still tense because al Shabaab could come back at any time," Wehliye told Reuters. (Additional reporting by Sahra Abdi in Nairobi, Writing by Richard Lough; Editing by Giles Elgood)